G.R. No.

L-21348 June 30, 1966

RED V COCONUT PRODUCTS, LTD., petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS, TANGLAW NG PAGGAWA, ALBERTO DELA CRUZ, ET
AL.,respondents.

Romeo A. Real for petitioner.

A. V. Villacorta for respondents.

BENGZON, J.P., J.:

Red V Coconut Products, Ltd. is a corporation with principal office and place of business at Lucena
City. It has in that city a desiccated coconut factory. In said factory, it has several hundred workers.
About 800 of said workers are members of Tanglaw ng Paggawa labor union.

Tanglaw ng Paggawa and Red V Coconut Products, Ltd. entered into a collective bargaining
agreement on July 15, 1958. Subsequently, however, on October 5, 1961, the aforementioned
company and union entered into another collective bargaining agreement, to expire on October 31,
1965.

The 1958 collective bargaining agreement provided among other things for payment of differentials
to night shift workers in the desiccated coconut factory. 1äw phï1.ñët

The 1961 collective bargaining agreement retained the same arrangement. It stated:

The present shift differential will remain in effect, namely, 35¢ for the second shift and 55¢
for the third Shift.

In the factory, there are two groups of workers, the three-shift group — let us call it Group A — and
the two — shift group — which we shall call Group B. As observed by the parties thereto,
differentials were paid to workers, under the 1958 and 1961 contracts, thus:

Hours of Work Differentials

Group A — 1st shift 4 A.M. — 12 Noon (8 Hrs.) None
2nd shift 12 Noon — 8 P.M. (8 Hrs.) .35
3rd shift 8 P.M. — 4 A.M. (8 Hrs.) .55

Group B — 1st shift 4 A.M. — 4 P.M. (12 Hrs.) None

2nd shift 4 P.M. — 4 A.M. (12 Hrs.) .55

On January 17, 1962, Tanglaw ng Paggawa and some 300 workers in the above-stated factory,
members of the said union, who belong to Group B, filed a petition in the Court of Industrial
Relations. Petitioners therein alleged that the petitioners-workers are shellers, parers, counters and
haulers in the two shifts (Group B) consisting of 12 hours each shift, the first shift from 4: 00 A.M. to
4: 00 P.M. and the second shift from 4 P.M. to 4 A.M.; that said workers change shift assignments
every week; that, accordingly, all of them work from 4 A.M. to 4 P.M. (first shift) for two alternate
weeks per month and from 4 P.M. to 4 A.M. (second shift) likewise for two alternate weeks in a
month; that although said workers perform work from 4 P.M. to 4 A.M., they receive only P.55
differential pay for the corresponding hours of night work; that their nightwork is equivalent to the
nightwork of the 2nd and 3rd shifts of Group A combined, so that they should receive what the 2nd
and 3rd shifts of Group A, combined, receive as differential pay, namely, P.90 (P.75 plus P.35); that,
therefore, they are entitled to payment of P.35 more as differential pay, since up to the time of the
petition, they received only P.55 per night as differential pay.

Said additional P.35 was asked by the petitioners-workers of Group B f or work done by them from 4
P.M. to 4 A.M. Their claim referred to the time from July 15, 1958 to the date of the petition, allegedly
at P186.90 per sheller, parer, counter and hauler, or a total sum of P65,228.10 more or less.

Respondent company therein filed on January 28, 1962 a motion to dismiss, stating that the Court of
Industrial Relations has no jurisdiction over the case for the reason that the claim asserted in the
petition is a simple money claim and that an interpretation of a contract (the collective bargaining
agreement is involved, which pertains to the regular courts.

The Court of Industrial Relations denied said motion by resolution of February 17, 1962 ruling that
the claim is for unpaid overtime pay of laborers still employed by the company. Said court likewise
denied a motion for reconsideration of the resolution. Red V Coconut Products, Ltd. filed its answer
on May 2, 1962.

In the meanwhile, on April 25, 1962, Tanglaw ng Paggawa filed with the Court of Industrial
Relations a new and independent petition alleging unfair labor practice against Red V Coconut
Products, Ltd. (CIR Case No. 3150 ULP). It was asserted therein that the company refused to grant
15 days leave with pay to the members of the union in violation of the 1961 collective bargaining
agreement.

The Court of Industrial Relations, on January 19, 1963 after trial, rendered its decision on the petition
for differential pay (CIR Case No. 1642-V). It found therein that the petitioners-workers are engaged
on pakiao or piece-work basis, and, therefore, are not entitled to overtime pay under the Eight-
Hour Labor Law (Sec. 2, CA 444); that their petition for night shift differentials based on the
collective bargaining agreements is meritorious because the company having paid night differentials
indiscriminately to the night shift workers of Group A and Group B alike, the payments should be
uniform and equal for the night shifts of both groups, that is, P.90. It therefore ordered
payment of the deficiency in said differentials to the workers of Group B.

It is exiomatic that to determine the issue of jurisdiction resort is to be made to the allegations in the
petition or complaint.2 The petition for shift differential in the present case, it is true, did not expressly
mention the Eight-Hour Labor Law. Nonetheless, it clearly asserted that (1) petitioners-laborers "are
working in the Red V Coconut Products, Ltd." and (2) they "work in two (2) shifts (Blue and Red
shifts) consisting of approximately 12 hours each shift." Accordingly, from the said allegations, it is
proper to regard the petition, as the Court of Industrial Relations did, as one for overtime pay by
workers still employed by the company. As such it falls within the jurisdiction of the Court of
Industrial Relations. For the same is in effect an assertion not of a simple money claim but, as
respondent court rightly held, of a claim for overtime pay by workers who are employees of the
company.3

During the trial, as stated, evidence was adduced to the effect that the aforesaid petitioners-workers
were engaged on a piece-work basis. The same, however, does not appear from the petition or
complaint filed with the respondent court. It therefore cannot affect its jurisdiction over the case,
which was already acquired. For jurisdiction, once acquired, continues until final adjudication of the
litigation.4
Furthermore, although the Eight-Hour Labor Law provides that it does not cover those workers who
prefer to be paid on piece-work basis (Sec. 2, CA 444), nothing in said law precludes an
agreement for the payment of overtime compensation to piece-workers. And in agreeing
to the provision for payment of shift differentials to the petitioners-workers aforementioned, in the
bargaining agreement, as well as in actually paying to them said differentials, though not in full, the
company in effect freely adhered to an application and implementation of
the Eight-Hour Labor Law, or its objectives, to said workers.

And, finally, the laborers in question are not strictly under the full concept of
piece-workers as contemplated by law for the reason that their hours of
work — that is, 12 hours per shift — are fixed by the employer. As ruled by this
Court in Lara v. Del Rosario, 94 Phil. 780, 781-782, the philosophy underlying the exclusion of piece
workers from the Eight-Hour Labor Law is that said workers are paid depending upon the work they
do "irrespective of the amount of time employed" in doing said work. Such freedom as to hours of
work does not obtain in the case of the laborers herein involved, since they are assigned by the
employer to work in two shifts for 12 hours each shift. Thus it cannot be said that for all
purposes these workers fall outside the law requiring payment of compensation for work done in
excess of eight hours. At least for the purpose of recovering the full differential pay stipulated in the
bargaining agreement as due to laborers who perform 12 hours of work under the night shift, said
laborers should be deemedpro tanto or to that extent within the scope of the afore-stated law.

Wherefore, the decision and resolution of the Court of Industrial Relations under review are affirmed.
So ordered.

=--------------

STOLT-NIELSEN MARINE SERVICES (PHILS.) INC., petitioner,

vs. NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE
OVERSEAS EMPLOYMENT ADMINISTRATION and MEYNARDO J.
HERNANDEZ, respondent.

DECISION
ROMERO, J.:

Private respondent Meynardo J. Hernandez was hired by petitioner Stolt-

Nielsen Marine Services (Phils.) Inc. (STOLT-NIELSEN, for short) as radio
officer on board M/T Stolt Condor for a period of ten months. He boarded the
vessel on January 20, 1990.
On April 26, 1990, the ship captain ordered private respondent to carry the
baggage of crew member Lito Loveria who was being repatriated. He refused
to obey the order out of fear in view of the utterance of said crew member
"makakasaksak ako" and also because he did not perceive such task as one of
his duties as radio officer. As a result of such refusal, private respondent was
ordered to disembark on April 30, 1990 and was himself repatriated on May 15,
1990. He was paid his salaries and wages only up to May 16, 1990.
On June 21, 1990, private respondent filed before public respondent POEA
a complaint for illegal dismissal and breach of contract praying for, among
other things, payment of salaries, wages, overtime and other benefits due him
for the unexpired portion of the contract which was six (6) months and three (3)
days.
Petitioner STOLT-NIELSEN in its answer alleged that on April 26, 1990,
private respondent refused to follow the "request" of the master of the vessel to
explain to Lolito Loveria the reason for the latter's repatriation and to assist him
in carrying his baggage, all in violation of Article XXIV, Section 1 of the
Collective Bargaining Agreement (CBA) and the POEA Standard
Contract. Hence, private respondent, after being afforded the opportunity to
explain his side, was dismissed for gross insubordination and serious
misconduct.
In reply, he denied that the master of the vessel requested him to explain to
Loveria the reason for the latter's repatriation.
Thereafter, POEA Administrator Jose N. Sarmiento rendered an award in
favor of private respondent, as follows:

"The issue to be resolved is whether or not complainant was illegally dismissed.

We rule in the affirmative.

Evaluating the reason for complainant's dismissal, we find the penalty

imposed too severe considering the violation committed. To our mind, a
warning would have been sufficient since this was the first offense
committed. Moreover, as a radio officer, it is not one of his official duties to
carry the luggage of outgoing seaman.
In the light of the foregoing, we hold that complainant's dismissal due to the
aforesaid incident arbitrary, whimsical and contrary to human nature and
experience, hence, not justified.Accordingly, he is entitled to his salaries for the
unexpired portion of his contract computed as follows:
1. 2. Basic salary - US$1,024.00
3. Fixed Overtime - 420.00[1]
Total US$1,434.00
4. Salary/day = ($1,434/30 days) = US$47.8/day
 5. Salary for 3 days - ($47.8 x 3) = US$143.4
6. Salary for 6 months - ($1,434 x 6) = US$8,604.00
7. Salary for the unexpired portion of his contract
(basic salary + fixed O.T.)
for 6 months and 3 days
(US$8,604 + 143.4) = US$8,747.40

Aggrieved, petitioner Stolt-Nielsen appealed to the National Labor Relations

Comemission (NLRC).
The issues posed for resolution in this case are: (a) whether private
respondent was legally dismissed on the ground of gross insubordination and
serious misconduct; and (b) whether private respondent was entitled to the
award of overtime pay.
With respect to the first issue, petitioner Stolt-Nielsen emphasizes how
"(e)mployment on board ocean-going vessels is totally different from land-
based ones in that in the former strict and faithful compliance of all lawful
commands and orders of the master or captain of the vessel is of paramount
and crucial importance." Petitioner then cites Part I, Section A (2) of the POEA
Standard Employment Contract which provides:

"2. The seaman binds himself to the following:

'a. To faithfully comply with and observe the terms and conditions of this contract,
violation of which shall be subject to disciplinary action pursuant to appendix 2 of this
crew contract.

xxx xxx xxx

d. To be obedient to the lawful commands of the master or any person who shall
succeed him.'"

It likewise adverts to Article XXIV, Section 1 of the CBA, viz:

"Authority of the Master

Section 1. It is understood and agreed that nothing contained in this is intended or

shall be construed so as to restrict in any way the superiority of the Master or prevent
the obedience of any member of the crew to any lawful order of any superior officer."
(Underscoring ours)
 Petitioner contends that since the captain's order to assist the crew member
who was being repatriated in carrying his baggage is lawful, private
respondent's refusal to obey the command is willful, thus warranting his
dismissal.
Article 282 of the Labor Code provides in part:

"Art. 282. Termination by Employer. An employer may terminate an employment for

any of the following causes: a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in connection with his
work;

xxx xxx xxx

Willful disobedience of the employer's lawful orders, as a just cause for the
dismissal of an employee, envisages the concurrence of at least two (2)
requisites: the employee's assailed conduct must have been willful or
intentional, the willfulness being characterized by a "wrongful and perverse
attitude"; and the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had been
engaged to discharge.[4]
the private respondent's services was a disproportionately heavy penalty.
Coming to the second issue involving the award of overtime pay, the NLRC
in its assailed resolution states:

"Anent the overtime pay, complainant alleged that he is entitled thereto as the same is
a fixed overtime pay. The respondents failed to controvert said allegations. In short,
the complainant's claim for overtime pay was undisputed and for this reason, the grant
of this claim must be upheld."[6]

Petitioner, on the other hand, cites this Court's pronouncement

in Cagampan v. NLRC,[7] thus:

In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established. Realistically speaking, a seaman,
by the very nature of his job, stays on board a ship or vessel beyond the regular eight-
hour work schedule. For the employer to give him overtime pay for the extra hours
when he might be sleeping or attending to his personal chores or even just lulling
away his time would be extremely unfair and unreasonable."

Petitioner's argument is well taken. A close scrutiny of the computation of

the monetary award[8] shows that the award for overtime was for the
remaining six (6) months and three (3) days of private respondent's
contract at which time he was no longer rendering services as he had
already been repatriated. In light of our aforequoted ruling in Cagampan
v. NLRC, said award for overtime should be, as it is hereby, disallowed for
being unjustified.
WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the
modification that the award for overtime pay should be DELETED.
SO ORDERED.

\PULP AND PAPER, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION AND EPIFANIA
ANTONIO, respondents.
PANGANIBAN, J.:

In the absence of wage rates specially prescribed for piece-rate workers, how
should the separation pay and salary differential of such workers be computed?

The Facts

The facts as found by the labor arbiter are as follows: [7]

A case of illegal dismissal and underpayment of wages [was] filed by MS. EPIFANIA
ANTONIO [private respondent herein] against PULP AND PAPER DISTRIBUTORS
INC., [petitioner herein] x x x.

In filing the present complaint, complainant in her position paper alleges that she was
a regular employee of the x x x corporation having served thereat as Wrapper
sometime in September 1975. On November 29, 1991, for unknown reasons, she was
advised verbally of her termination and was given a prepared form of Quitclaim and
Release which she refused to sign. Instead she brought the present complaint for
illegal dismissal.

In charging the [herein petitioner] of underpayment of wages, complainant in the

same position paper alleges that, rarely during her employment with the respondent
she received her salary, a salary which was in accordance with the minimum wage
law. She was not paid overtime pay, holiday pay and five-day service incentive leave
pay, hence she is claiming for payments thereof by instituting the present case.
Respondent on the otherhand [sic] denied having terminated the services of the
complainant and alleges inter alia that starting 1989 the orders from customers
became fewer and dwindled to the point that it is no longer practical to maintain the
present number of packer/wrappers. Maintaining the same number of
packers/wrappers would mean less pay because the work allocation is no longer the
same as it was.Such being the case, the respondent has to reduce temporarily the
number of packers/wrappers. Complainant was among those who were temporarily
laid-off from work. Complainant last worked with the company on June 29, 1991.

As regards complainants allegation that on November 29, 1991, she was forced to
sign a quitclaim and release by the respondent, the latter clarified that considering that
five months from the time the complainant last worked with the company, the
management decided to release the complainant and give her a chance to look for
another job in the meantime that no job is available for her with the company.In other
words, complainant was given the option and considering that she did not sign the
documents referred to as the Quitclaim and Release, the respondent did not insist, and
did not terminate the services of the complainant. It was just surprise [sic] to receive
the present complaint. In fact, respondent added that the reason why the complainant
was called on November 29, 1991 was not to work but to receive her 13th month pay
of P636.70 as shown by the voucher she signed (Annex-A, Respondent).

As regards the claim of the complainant for underpayment, respondent did not
actually denied (sic) the same but give [sic] the reservation that should the same be
determined by this Office it is willing to settle the same considering the fact that
complainant herein being paid by results, it is not in a proper position to determine
whether the complainant was underpaid or not.

The Issues

Petitioner couched the main issue in this wise: [8]

While it expressly admits that private respondent is entitled to separation

pay, petitioner raises nonetheless the following queries: (a) Are the factors in
determining the amount of separation pay for a piece-rate worker the same as
that of a time-worker? (b) Is a worker, who was terminated for lack of work,
entitled to separation pay at the rate of one-months pay for every year of
service? [9]

The Courts Ruling

 The appeal is not meritorious.

First Issue: Computation of Minimum Wage

Petitioner argues that private respondent was a piece-rate worker and not
a time-worker. Since private respondents employment as (p)acker/(w)rapper in
1975 until her separation on June 29, 1991, (h)er salary depended upon the
number of reams of bond paper she packed per day. Petitioner contends that
private respondents work depended upon the number and availability of
purchase orders from customers. Petitioner adds that, oftentimes,
packers/wrappers only work three to four hours a day. Thus, her separation pay
must be based on her latest actual compensation per piece or on the minimum
wage per piece as determined by Article 101 of the Labor Code, whichever is
higher, and not on the daily minimum wage applicable to time-workers. [11]

Compensation of Pieceworkers

In the absence of wage rates based on time and motion studies determined
by the labor secretary or submitted by the employer to the labor secretary for
his approval, wage rates of piece-rate workers must be based on the
applicable daily minimum wage determined by the Regional Tripartite
Wages and Productivity Commission. To ensure the payment of fair and
reasonable wage rates, Article 101 of the Labor Code provides that the
[12]

Secretary of Labor shall regulate the payment of wages by results,

including pakyao, piecework and other nontime work. The same statutory
provision also states that the wage rates should be based, preferably, on time
and motion studies, or those arrived at in consultation with representatives of
workers and employers organizations. In the absence of such prescribed wage
rates for piece-rate workers, the ordinary minimum wage rates prescribed by
the Regional Tripartite Wages and Productivity Boards should apply. This is in
compliance with Section 8 of the Rules Implementing Wage Order Nos. NCR-
02 and NCR-02-A -- the prevailing wage order at the time of dismissal of private
respondent, viz.: [13]

SEC. 8. Workers Paid by Results. -- a) All workers paid by results including those
who are paid on piece work, takay, pakyaw, or task basis, shall receive not less than
the applicable minimum wage rates prescribed under the Order for the normal
working hours which shall not exceed eight (8) hours work a day, or a proportion
thereof for work of less than the normal working hours.
The adjusted minimum wage rates for workers paid by results shall be computed in
accordance with the following steps:

1) Amount of increase in AMW x 100 = % increase

Previous AMW

2) Existing rate/piece x % increase = increase in rate/piece;

3) Existing rate/piece + increase in rate/piece = adjusted rate/piece.

b) The wage rates of workers who are paid by results shall continue to be established
in accordance with Art. 101 of the Labor Code, as amended and its implementing
regulations. (Underscoring supplied.)

On November 29, 1991, private respondent was orally informed of the

termination of her employment. Wage Order No. NCR-02, in effect at the time,
set the minimum daily wage for non-agricultural workers like private respondent
at P118.00. This was the rate used by the labor arbiter in computing the
[14]

separation pay of private respondent. We cannot find any abuse of discretion,

let alone grave abuse, in the order of the labor arbiter which was later affirmed
by the NLRC.
Moreover, since petitioner employed piece-rate workers, it should have
inquired from the secretary of labor about their prescribed specific wage
rates. In any event, there being no such prescribed rates, petitioner, after
consultation with its workers, should have submitted for the labor secretarys
approval time and motion studies as basis for the wage rates of its
employees. This responsibility of the employer is clear under Section 8, Rule
VII, Book III of the Omnibus Rules Implementing the Labor Code:

Section 8. Payment by result. (a) On petition of any interested party, or upon its
initiative, the Department of Labor shall use all available devices, including the use of
time and motion studies and consultations with representatives of employers and
workers organizations, to determine whether the employees in any industry or
enterprise are being compensated in accordance with the minimum wage requirements
of this Rule.

(b) The basis for the establishment of rates for piece, output or contract work shall be
the performance of an ordinary worker of minimum skill or ability.

(c) An ordinary worker of minimum skill or ability is the average worker of the lowest
producing group representing 50% of the total number of employees engaged in
similar employment in a particular establishment, excluding learners, apprentices and
handicapped workers employed therein.

(d) Where the output rates established by the employer do not conform with the
standards prescribed herein, or with the rates prescribed by the Department of Labor
in an appropriate order, the employees shall be entitled to the difference between the
amount to which they are entitled to receive under such prescribed standards or rates
and that actually paid them by employer.

In the present case, petitioner as the employer unquestionably failed to

discharge the foregoing responsibility. Petitioner did not submit to the secretary
of labor a proposed wage rate -- based on time and motion studies and reached
after consultation with the representatives from both workers and employers
organization -- which would have applied to its piece-rate workers. Without
those submissions, the labor arbiter had the duty to use the daily minimum
wage rate for non-agricultural workers prevailing at the time of private
respondents dismissal, as prescribed by the Regional Tripartite Wages and
Productivity Boards. Put differently, petitioner did not take the initiative of
proposing an appropriate wage rate for its piece-rate workers.In the absence of
such wage rate, the labor arbiter cannot be faulted for applying the prescribed
minimum wage rate in the computation of private respondents separation
pay. In fact, it acted and ruled correctly and legally in the premises.
It is clear, therefore, that the applicable minimum wage for an eight-hour
working day is the basis for the computation of the separation pay of piece-rate
workers like private respondent.The computed daily wage should not be
reduced on the basis of unsubstantiated claims that her daily working
hours were less than eight. Aside from its bare assertion, petitioner presented
no clear proof that private respondents regular working day was less than eight
hours. Thus, the labor arbiter correctly used the full amount of P118.00 per day
in computing private respondents separation pay. We agree with the following
computation: [15]

Considering therefore that complainant had been laid-off for more than six (6) months
now, we strongly feel that it is already reasonable for the respondent to pay the
complainant her separation pay of one month for every year of service, a fraction of
six (6) months to be considered as one whole year. Separation pay should be
computed based on her minimum salary as will be determined hereunder.

Separation pay 1 month = 16 years

P118.00 x 26 x 16 years = P49,088.00
 The amount P118.00 represents the applicable daily minimum wage per
Wage Order Nos. NCR-02 and NCR-02-A; 26, the number of working days in a
month after excluding the four Sundays which are deemed rest days; 16, the
total number of years spent by private respondent in the employ of petitioner.

Second Issue: Computation of Separation Pay

Petitioner questions not only the basis for computing private respondents
monthly wage; it also contends that private respondents separation pay should
not have been computed at one months pay for every year of service. Because
private respondent should be considered retrenched, the separation pay should
be one months pay or at least one/half (1/2) month pay for every year of service,
whichever is higher, and not one (1) months pay for every year of service as
public respondent had ruled. [16]

Petitioner misapprehended the ground relied upon by public respondent for

awarding separation pay. In this case, public respondent held that private
respondent was constructively dismissed, pursuant to Article 286 of the Labor
Code which reads:

ART. 286. When employment not deemed terminated. -- The bonafide suspension of
the operation of a business or undertaking for a period not exceeding six (6) months,
or the fulfillment by the employee of a military or civic duty shall not terminate
employment. In all such cases, the employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates his desire to resume his work
not later that one (1) month from his resumption of operations of his employer or from
his relief from the military or civic duty.

WHEREFORE, premises considered, the petition is DISMISSED and the

assailed Decision is AFFIRMED. Costs against petitioner.

PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, LABOR ARBITER ROMULUS
PROTACIO and DR. HERMINIO A. FABROS, respondents.
Private respondent was employed as flight surgeon at petitioner company. He was
assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon
until 12:00 midnight.
 On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic
to have his dinner at his residence, which was about five-minute drive away. A few
minutes later, the clinic received an emergency call from the PAL Cargo Services. One
of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr.
Merlino Eusebio, called private respondent at home to inform him of the emergency. The
patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed
him to the hospital. When private respondent reached the clinic at around 7:51 in the
evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon
ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon,
in turn, required private respondent to explain why no disciplinary sanction should be
taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-
minute meal break; that he immediately left his residence upon being informed by
Mr. Eusebio about the emergency and he arrived at the clinic a few minutes
later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting
for him.
Finding private respondents explanation unacceptable, the management charged
private respondent with abandonment of post while on duty. He was given ten days to
submit a written answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous
explanation. He further denied that he abandoned his post on February 17, 1994. He said
that he only left the clinic to have his dinner at home. In fact, he returned to the clinic at
7:51 in the evening upon being informed of the emergency.
After evaluating the charge as well as the answer of private respondent, petitioner
company decided to suspend private respondent for three months effective December
16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
Petitioner argues that being a full-time employee, private respondent is obliged to
stay in the company premises for not less than eight (8) hours. Hence, he may not leave
the company premises during such time, even to take his meals.
Ruling We are not impressed.
Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.The normal hours of work of any employee
shall not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one

million (1,000,000) or in hospitals and clinics with a bed capacity of at least
one hundred (100) shall hold regular office hours for eight (8) hours a day, for
five (5) days a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for six (6) days or
forty-eight (48) hours, in which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of their regular wage for work
on the sixth day. For purposes of this Article, health personnel shall include:
resident physicians, nurses, nutritionists, dieticians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic personnel.(emphasis
supplied)

Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor

may prescribe, it shall be the duty of every employer to give his employees
not less than sixty (60) minutes time-off for their regular meals.

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further
states:

Sec. 7. Meal and Rest Periods.Every employer shall give his employees,
regardless of sex, not less than one (1) hour time-off for regular meals,
except in the following cases when a meal period of not less than twenty
(20) minutes may be given by the employer provided that such shorter
meal period is credited as compensable hours worked of the employee;

(a) Where the work is non-manual work in nature or does not involve
strenuous physical exertion;

(b) Where the establishment regularly operates not less than sixteen hours a
day;

(c) In cases of actual or impending emergencies or there is urgent work

to be performed on machineries, equipment or installations to avoid
serious loss which the employer would otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes
shall be considered as compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in the
law may it be inferred that employees must take their meals within the company
premises. Employees are not prohibited from going out of the premises as long as
they return to their posts on time. Private respondents act, therefore, of going
home to take his dinner does not constitute abandonment.
We now go to the award of moral damages to private respondent.
 Not every employee who is illegally dismissed or suspended is entitled to
damages. As a rule, moral damages are recoverable only where the dismissal or
suspension of the employee was attended by bad faith or fraud, or constituted an act
oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy.[6] Bad faith does not simply mean negligence or bad judgment. It involves a state
of mind dominated by ill will or motive. It implies a conscious and intentional design to do
a wrongful act for a dishonest purpose or some moral obliquity. [7] The person claiming
moral damages must prove the existence of bad faith by clear and convincing evidence
for the law always presumes good faith.[8]
In the case at bar, there is no showing that the management of petitioner company
was moved by some evil motive in suspending private respondent.
SO ORDERED.

AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. NATIONAL

LABOR RELATIONS COMMISSION and J.C. TAILOR SHOP and/or
JOHNNY CO, respondents.
The facts are as follows.
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3,
1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and
holidays. As in the case of the other 100 employees of private respondents, petitioners
were paid on a piece-work basis, according to the style of suits they made. Regardless
of the number of pieces they finished in a day, they were each given a daily pay of at
least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for
illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on
holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and
attorneys fees.
After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of
illegal dismissal and accordingly ordered them to pay petitioners claims. The dispositive
portion of the Labor Arbiters decision reads:
On appeal by private respondents, the NLRC reversed the decision of the Labor
Arbiter. It found that petitioners had not been dismissed from employment but merely
threatened with a closure of the business if they insisted on their demand for a straight
payment of their minimum wage, after petitioners, on January 17, 1989, walked out of a
meeting with private respondents and other employees.According to the NLRC, during
that meeting, the employees voted to maintain the company policy of paying them
according to the volume of work finished at the rate of P18.00 per dozen of tailored
clothing materials. Only petitioners allegedly insisted that they be paid the minimum wage
and other benefits. The NLRC held petitioners guilty of abandonment of work and
accordingly dismissed their claims except that for 13th month pay. The dispositive portion
of its decision reads:
. They deny that they abandoned their work.

The petition is meritorious.

First. There is no dispute that petitioners were employees of private
respondents although they were paid not on the basis of time spent on the job but
according to the quantity and the quality of work produced by them. There are two
categories of employees paid by results: (1) those whose time and performance
are supervised by the employer. (Here, there is an element of control and supervision
over the manner as to how the work is to be performed. A piece-rate worker belongs to
this category especially if he performs his work in the company premises.); and (2) those
whose time and performance are unsupervised. (Here, the employers control is over the
result of the work. Workers on pakyao and takay basis belong to this group.) Both
classes of workers are paid per unit accomplished. Piece-rate payment is generally
practiced in garment factories where work is done in the company premises, while
payment on pakyao and takay basis is commonly observed in the agricultural industry,
such as in sugar plantations where the work is performed in bulk or in volumes difficult to
quantify.[4] Petitioners belong to the first category, i.e., supervised employees.
In determining the existence of an employer-employee relationship, the following
elements must be considered: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees
conduct.[5] Of these elements, the most important criterion is whether the employer
controls or has reserved the right to control the employee not only as to the result of the
work but also as to the means and methods by which the result is to be accomplished.[6]
In this case, private respondents exercised control over the work of petitioners. As
tailors, petitioners worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays.The mere fact that they were paid on a piece-rate basis
does not negate their status as regular employees of private respondents. The term wage
is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of
being expressed in terms of money whether fixed or ascertained on a time, task, piece or
commission basis. Payment by the piece is just a method of compensation and does not
define the essence of the relations.[7] Nor does the fact that petitioners are not covered by
the SSS affect the employer-employee relationship.
Indeed, the following factors show that petitioners, although piece-rate workers, were
regular employees of private respondents: (1) within the contemplation of Art. 280 of the
Labor Code, their work as tailors was necessary or desirable in the usual business of
private respondents, which is engaged in the tailoring business; (2) petitioners worked for
private respondents throughout the year, their employment not being dependent on a
specific project or season; and, (3) petitioners worked for private respondents for more
than one year.[8]
 Second. Private respondents contend, however, that petitioners refused to report for
work after learning that the J.C. Tailoring and Dress Shop Employees Union had
demanded their (petitioners) dismissal for conduct unbecoming of employees. In support
of their claim, private respondents presented the affidavits[9] of Emmanuel Y. Caballero,
president of the union, and Amado Cabaero, member, that petitioners had not been
dismissed by private respondents but that practically all employees of the company,
including the members of the union had asked management to terminate the services of
petitioners.The employees allegedly said they were against petitioners request for change
of the mode of payment of their wages, and that when a meeting was called to discuss
this issue, a petition for the dismissal of petitioners was presented, prompting the latter to
walk out of their jobs and instead file a complaint for illegal dismissal against private
respondents on January 17, 1989, even before all employees could sign the petition and
management could act upon the same.
To justify a finding of abandonment of work, there must be proof of a deliberate and
unjustified refusal on the part of an employee to resume his employment. The burden of
proof is on the employer to show an unequivocal intent on the part of the employee to
discontinue employment.[10] Mere absence is not sufficient. It must be accompanied by
manifest acts unerringly pointing to the fact that the employee simply does not want to
work anymore.[11]
Private respondents failed to discharge this burden. Other than the self-serving
declarations in the affidavits of their two employees, private respondents did not adduce
proof of overt acts of petitioners showing their intention to abandon their work. On the
contrary, the evidence shows that petitioners lost no time in filing the case for illegal
dismissal against private respondent. This fact negates any intention on their part to sever
their employment relationship.[12] Abandonment is a matter of intention; it cannot be
inferred or presumed from equivocal acts.[13]
Third. Private respondents invoke the compromise agreement,[14] dated March 2,
1993, between them and petitioner Avelino Lambo, whereby in consideration of the sum
of P10,000.00, petitioner absolved private respondents from liability for money claims or
any other obligations.
To be sure, not all quitclaims are per se invalid or against public policy. But those (1)
where there is clear proof that the waiver was wangled from an unsuspecting or gullible
person or (2) where the terms of settlement are unconscionable on their face are
invalid. In these cases, the law will step in to annul the questionable
transaction.[15] However, considering that the Labor Arbiter had given petitioner Lambo a
total award of P94,719.20, the amount of P10,000.00 to cover any and all monetary
claims is clearly unconscionable. As we have held in another case,[16] the subordinate
position of the individual employee vis-a-vis management renders him especially
vulnerable to its blandishments, importunings, and even intimidations, and results in his
improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or
releases are looked upon with disfavor for being contrary to public policy and are
ineffective to bar claims for the full measure of the workers legal rights. [17] An employee
who is merely constrained to accept the wages paid to him is not precluded from
recovering the difference between the amount he actually received and that amount which
he should have received.
Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th
month pay, separation pay and attorneys fees, corresponding to 10% of the total
monetary awards, in favor of petitioners.
As petitioners were illegally dismissed, they are entitled to reinstatement with
backwages. Considering that petitioners were dismissed from the service on January 17,
1989, i.e., prior to March 21, 1989,[18] the Labor Arbiter correctly applied the rule in
the Mercury Drug case,[19] according to which the recovery of backwages should be
limited to three years without qualifications or deductions. Any award in excess of three
years is null and void as to the excess.[20]
The Labor Arbiter correctly ordered private respondents to give separation
pay. Considerable time has lapsed since petitioners dismissal, so that reinstatement
would now be impractical and hardly in the best interest of the parties. In lieu of
reinstatement, separation pay should be awarded to petitioners at the rate of one month
salary for every year of service, with a fraction of at least six (6) months of service being
considered as one (1) year.[21]
The awards for overtime pay, holiday pay and 13th month pay are in accordance with
our finding that petitioners are regular employees, although paid on a piece-rate
basis.[22] These awards are based on the following computation of the Labor Arbiter:
-______________________________________________________

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO

GONZALES and MA. THERESA
MONTEJO, petitioners, vs. INTERPHIL LABORATORIES, INC., AND
HONORABLE LEONARDO A. QUISUMBING, SECRETARY OF
LABOR AND EMPLOYMENT, respondents.

DECISION
KAPUNAN, J.:

Assailed in this petition for review on certiorari are the decision, promulgated on 29
December 1999, and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-
G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of
the rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the business of
manufacturing and packaging pharmaceutical products. They had a Collective Bargaining
Agreement (CBA) effective from 01 August 1990 to 31 July 1993.
 Prior to the expiration of the CBA or sometime in February 1993, Allesandro G.
Salazar,[1] Vice-President-Human Resources Department of respondent company, was approached
by Nestor Ocampo, the union president, and Hernando Clemente, a union director. The two union
officers inquired about the stand of the company regarding the duration of the CBA which was set
to expire in a few months. Salazar told the union officers that the matter could be best discussed
during the formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more
about the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested
for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting
was held on 15 April 1993 where the union officers asked whether Salazar would be amenable to
make the new CBA effective for two (2) years, starting 01 August 1993. Salazar, however,
declared that it would still be premature to discuss the matter and that the company could not make
a decision at the moment. The very next day, or on 16 April 1993, all the rank-and-file employees
of the company refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00
p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees
stopped working and left their workplace without sealing the containers and securing the raw
materials they were working on. When Salazar inquired about the reason for their refusal to
follow their normal work schedule, the employees told him to "ask the union officers." To
minimize the damage the overtime boycott was causing the company, Salazar immediately asked
for a meeting with the union officers. In the meeting, Enrico Gonzales, a union director, told
Salazar that the employees would only return to their normal work schedule if the company would
agree to their demands as to the effectivity and duration of the new CBA. Salazar again told the
union officers that the matter could be better discussed during the formal renegotiations of the
CBA.Since the union was apparently unsatisfied with the answer of the company, the overtime
boycott continued. In addition, the employees started to engage in a work slowdown campaign
during the time they were working, thus substantially delaying the production of the company.[2]
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and
the latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations
Commission (NLRC) a petition to declare illegal petitioner unions overtime boycott and work
slowdown which, according to respondent company, amounted to illegal strike. The case, docketed
NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation
Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA
negotiations.[3] The parties, however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with Office of the Secretary of Labor and Employment a petition for
assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair
labor practice allegedly committed by respondent company. On 12 February 1994, the union
staged a strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order[4] over
the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent
company to immediately accept all striking workers, including the fifty-three (53) terminated
union officers, shop stewards and union members back to work under the same terms and
conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its
employees in 1993.[5] On the other hand, petitioner union was directed to strictly
and immediately comply with the return to work orders issued by (the) Office x x x.[6] The same
order pronounced that (a)ll pending cases which are direct offshoots of the instant labor dispute
are hereby subsumed herewith.[7]
In the interim, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner
union filed an Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend
Proceedings seeking the consolidation of the case with the labor dispute pending before the
Secretary of Labor. Despite objection by respondent company, Labor Arbiter Caday held in
abeyance the proceedings before him. However, on 06 June 1994, Acting Labor Secretary Jose S.
Brillantes, after finding that the issues raised would require a formal hearing and the presentation
of evidentiary matters, directed the Labor Arbiters Caday and M. Sol del Rosario to proceed with
the hearing of the cases before them and to thereafter submit their report and recommendation to
his office.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then
Secretary of Labor Leonardo A. Quisumbing.[8] Then Secretary Quisumbing approved and adopted
the report in his Order, dated 13 August 1997, hence:

WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be

supported by substantial evidence, this Office hereby RESOLVES to APPROVE and
ADOPT the same as the decision in this case, and judgment is hereby rendered:

(1) Declaring the overtime boycott and work slowdown as illegal strike;

(2) Declaring the respondent union officers namely:

Nestor Ocampo - President

Carmelo Santos - Vice-President

Marites Montejo - Treasurer/Board Member

Rico Gonzales - Auditor

Rod Abuan - Director

Segundino Flores - Director

Hernando Clemente - Director

who spearheaded and led the overtime boycott and work slowdown, to have lost
their employment status; and
 (3) Finding the respondents guilty of unfair labor practice for violating the
then existing CBA which prohibits the union or any employee during the
existence of the CBA from staging a strike or engaging in slowdown or
interruption of work and ordering them to cease and desist from further
committing the aforesaid illegal acts.

Petitioner union moved for the reconsideration of the order but its motion was denied. The
union went to the Court of Appeals via a petition for certiorari. In the now questioned decision
promulgated on 29 December 1999, the appellate court dismissed the petition. The unions motion
for reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE

HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW,
COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION WHEN IT COMPLETELY
DISREGARDED PAROL EVIDENCE RULE IN THE EVALUATION AND
APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS

COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT DECLARE
PRIVATE RESPONDENTS ACT OF EXTENDING SUBSTANTIAL
SEPARATION PACKAGE TO ALMOST ALL INVOLVED OFFICERS OF
PETITIONER UNION, DURING THE PENDENCY OF THE CASE, AS
TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS ANY
MISDEED COMMITTED.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS

COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT THE
SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICTION OVER A
CASE (A PETITION TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG
BEEN FILED AND PENDING BEFORE THE LABOR ARBITER.[9]

We sustain the questioned decision.

On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to
rule on the illegal strike committed by petitioner union, it is undisputed that the petition to declare
the strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and
Employment issued the assumption order on 14 February 1994. However, it cannot be denied that
the issues of overtime boycott and work slowdown amounting to illegal strike before Labor Arbiter
Caday are intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March
1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings before him and
consolidate the same with the case before the Secretary of Labor. When Acting Labor Secretary
Brillantes ordered Labor Arbiter Caday to continue with the hearing of the illegal strike case, the
parties acceded and participated in the proceedings, knowing fully well that there was also a
directive for Labor Arbiter Caday to thereafter submit his report and recommendation to the
Secretary. As the appellate court pointed out, the subsequent participation of petitioner union in
the continuation of the hearing was in effect an affirmation of the jurisdiction of the Secretary of
Labor.
The appellate court also correctly held that the question of the Secretary of Labor and
Employments jurisdiction over labor-related disputes was already settled in International
Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU)[10] where the
Court declared:

In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor
Code the authority to assume jurisdiction over a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest, and
decide the same accordingly. Necessarily, this authority to assume jurisdiction over
the said labor dispute must include and extend to all questions and controversies
arising therefrom, including cases over which the labor arbiter has exclusive
jurisdiction.

Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions
thereto. This is evident from the opening proviso therein reading (e)xcept as otherwise
provided under this Code x x x.Plainly, Article 263(g) of the Labor Code was meant
to make both the Secretary (or the various regional directors) and the labor arbiters
share jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be
able to effectively and efficiently dispose of the primary dispute. To hold the contrary
may even lead to the absurd and undesirable result wherein the Secretary and the labor
arbiter concerned may have diametrically opposed rulings. As we have said, (i)t is
fundamental that a statute is to be read in a manner that would breathe life into it,
rather than defeat it.

In fine, the issuance of the assailed orders is within the province of the Secretary as
authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same
Code, taken conjointly and rationally construed to subserve the objective of the
jurisdiction vested in the Secretary.[11]

Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that
the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record,
must be accorded due respect by the Supreme Court.[12] Here, the report and recommendation of
Labor Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but it was
likewise affirmed by the Court of Appeals. We see no reason to depart from their findings.
 Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the
parol evidence rule[13] when they upheld the allegation of respondent company that the work
schedule of its employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00
a.m. According to petitioner union, the provisions of their CBA on working hours clearly stated
that the normal working hours were from 7:30 a.m. to 4:30 p.m.[14] Petitioner union underscored
that the regular work hours for the company was only eight (8) hours. It further contended that the
Labor Arbiter as well as the Court of Appeal should not have admitted any other evidence contrary
to what was stated in the CBA.
The reliance on the parol evidence rule is misplaced. In labor cases pending before the
Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are
not controlling.[15]Rules of procedure and evidence are not applied in a very rigid and technical
sense in labor cases.[16] Hence, the Labor Arbiter is not precluded from accepting and evaluating
evidence other than, and even contrary to, what is stated in, the CBA.
In any event, the parties stipulated:

Section 1. Regular Working Hours - A normal workday shall consist of not more than
eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M.
to 4:30 P.M. The schedule of shift work shall be maintained; however the company
may change the prevailing work time at its discretion, should such change be
necessary in the operations of the Company. All employees shall observe such rules as
have been laid down by the company for the purpose of effecting control over
working hours.[17]

It is evident from the foregoing provision that the working hours may be changed, at the
discretion of the company, should such change be necessary for its operations, and that the
employees shall observe such rules as have been laid down by the company. In the case before us,
Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily
schedule by reason of the nature of its business and the demands of its clients. It was established
that the employees adhered to the said work schedule since 1988. The employees are deemed to
have waived the eight-hour schedule since they followed, without any question or complaint, the
two-shift schedule while their CBA was still in force and even prior thereto. The two-shift schedule
effectively changed the working hours stipulated in the CBA. As the employees assented by
practice to this arrangement, they cannot now be heard to claim that the overtime boycott is
justified because they were not obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:

Respondents' attempt to deny the existence of such regular overtime schedule is belied by their
own awareness of the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and
6:00 P.M. to 6:00 A.M. of the following day that has been going on since 1988. Proof of this is
the case undisputedly filed by the union for and in behalf of its members, wherein it is claimed
that the company has not been computing correctly the night premium and overtime pay for
work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-
10, testimony of Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union
Vice-President Carmelo C. Santos, demanded that the company make a recomputation of
the overtime records of the employees from 1987 (Exh. "P"). Even their own witness, union
Director Enrico C. Gonzales, testified that when in 1992 he was still a Quality Control Inspector
at the Sucat Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M.,
sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to
6:00 A.M., and when on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9,
hearing of January 10, 1994). Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to
12, 1993, which were passed around daily for the employees to sign, his name appeared but
without his signatures, he however had rendered overtime during those dates and was paid
because unlike in other departments, it has become a habit to them to sign the overtime schedule
weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The awareness of the respondent union,
its officers and members about the existence of the regular overtime schedule of 6:00 A.M. to
6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be further shown in the
discussion of the second issue.[18]

As to the second issue of whether or not the respondents have engaged in "overtime
boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both
amounting to illegal strike, the evidence presented is equally crystal clear that the
"overtime boycott" and "work slowdown" committed by the respondents amounted to
illegal strike.

As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-

President-Human Resources Department, sometime in February, 1993, he was
approached by the union President NestorOcampo and Union Director Hernando
Clemente who asked him as to what was the stand of the company regarding the
duration of the CBA between the company and which was set to expire on July 31,
1993. He answered that the matter could be best discussed during the formal
renegotiations which anyway was to start soon. This query was followed up sometime
in March, 1993, and his answer was the same. In early April, 1993, the union
president requested for a meeting to discuss the duration and effectivity of the
CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein the
union officers asked him if he would agree to make the new CBA effective on August
1, 1993 and the term thereof to be valid for only two (2) years. When he answered that
it was still premature to discuss the matter, the very next day, April 16, 1993, all the
rank and file employees of the company refused to follow their regular two-shift work
schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-
hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M., respectively,
leaving their place of work without sealing the containers and securing the raw
materials they were working on.When he saw the workers leaving before the end of
their shift, he asked them why and their reply was "asked (sic) the union
officers." Alarmed by the overtime boycott and the damage it was causing the
company, he requested for a meeting with the union officers. In the meeting, he asked
them why the regular work schedule was not being followed by the employees, and
union Director Enrico Gonzales, with the support of the other union officers, told him
that if management would agree to a two-year duration for the new CBA and an
effectivity date of August 1, 1993, all employees will return to the normal work
schedule of two 12-hour shifts. When answered that the management could not decide
on the matter at the moment and to have it discussed and agreed upon during the
formal renegotiations, the overtime boycott continued and the employees at the same
time employed a work slowdown campaign during working hours, causing
considerable delay in the production and complaints from the clients/customers (Exh.
"O", Affidavit of Alessandro G. Salazar which formed part of his direct
testimony). This testimonial narrations of Salazar was, as earlier said, undisputed
because the respondents' counsel waived his cross examination (t.s.n. p. 15, hearing
on August 9, 1994).

Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other
Department Managers pointing to the union officers as the instigators of the overtime
boycott and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a
union member at the time the concerted activities of the respondents took place, is
quoted hereunder:

2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo ang

lahat ng taga-maintenance ng bawat departamento upang dumalo sa isang miting. Sa
miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na mayroon
ilalabas na memo ang Unyon na nag-uutos sa mga empleyado ng Kompanya na mag-
imbento ng sari-saring dahilan para lang hindi sila makapagtrabaho
ng"overtime". Sinabihan rin ako ni Tessie Montejo na siya namang Treasurer ng
Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes para hindi ka masabihan
ng magtrabaho ng Sabado at Linggo' na siya namang araw ng "overtime" ko. x x x

3. Nakalipas ang dalawaang buwan at noong unang bahagi ng Abril 1993, miniting
kami ng Shop Stewards namin na sina Ariel Abenoja, Dany Tansiongco at Vicky
Baron. Sinabihan kami na huwag ng mag-ovetime pag nagbigay ng senyas ang Unyon
ng "showtime."

4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng

"showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay silang
umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18, 1993 na Sabado at
Linggo.

5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa
opisina ng Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng Unyon na sina:

Nestor Ocampo ----- Presidente

Carmelo Santos ----- Bise-Presidente

Nanding Clemente -- Director

Tess Montejo------- Chief Steward

Segundo Flores ------ Director

Enrico Gonzales ----- Auditor

Boy Alcantara ------- Shop Steward

Rod Abuan ----------- Director

at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga
opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-ovetime"
gayong "Binigyan ka na namin ng instruction na huwag pumasok, pinilit mo pa ring
pumasok." "Management ka ba o Unyonista." Sinagot ko na ako ay
Unyonista. Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala akong
maibigay na dahilan para lang hindi pumasok at "mag-overtime." Pagkatapos nito,
ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang umalis.

x x x"

Likewise, the respondents' denial of having a hand in the work slowdown since there
was no change in the performance and work efficiency for the year 1993 as compared
to the previous year was even rebuffed by their witness M. Theresa Montejo, a
Quality Control Analyst. For on cross-examination, she (Montejo) admitted that she
could not answer how she was able to prepare the productivity reports from May 1993
to February 1994 because from April 1993 up to April 1994, she was on union
leave. As such, the productivity reports she had earlier shown was not prepared by her
since she had no personal knowledge of the reports (t.s.n. pp. 32-35, hearing of
February 27, 1995). Aside from this admission, the comparison made by the
respondents was of no moment, because the higher production for the years previous
to 1993 was reached when the employees regularly rendered overtime work. But
undeniably, overtime boycott and work slowdown from April 16, 1993 up to March 7,
1994 had resulted not only in financial losses to the company but also damaged its
business reputation.

Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the
24-hour work schedule thru their concerted activities of "overtime boycott" and "work
slowdown" from April 16, 1993 up to March 7, 1994, to force the petitioner company
to accede to their unreasonable demands, can be classified as a strike on an
installment basis, as correctly called by petitioner company. xxx[19]

It is thus undisputed that members of the union by their own volition decided not to render
overtime services in April 1993.[20] Petitioner union even admitted this in its Memorandum, dated
12 April 1999, filed with the Court of Appeals, as well as in the petition before this Court, which
both stated that "(s)sometime in April 1993, members of herein petitioner, on their own volition
and in keeping with the regular working hours in the Company x x x decided not to render
overtime".[21] Such admission confirmed the allegation of respondent company that petitioner
engaged in overtime boycott and work slowdown which, to use the words of Labor Arbiter Caday,
was taken as a means to coerce respondent company to yield to its unreasonable demands.
More importantly, the overtime boycott or work slowdown by the employees constituted a
violation of their CBA, which prohibits the union or employee, during the existence of the CBA,
to stage a strike or engage in slowdown or interruption of work.[22] In Ilaw at Buklod ng
Manggagawa vs. NLRC,[23] this Court ruled:

x x x (T)he concerted activity in question would still be illicit because contrary to the
workers explicit contractual commitment that there shall be no strikes, walkouts,
stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes,
or any other interference with any of the operations of the COMPANY during the
term of xxx (their collective bargaining) agreement.

What has just been said makes unnecessary resolution of SMCs argument that the workers
concerted refusal to adhere to the work schedule in force for the last several years, is
a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike
clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement
with the petitioners concept of a slowdown as a strike on the installment plan; as a willful
reduction in the rate of work by concerted action of workers for the purpose of restricting the
output of the employer, in relation to a labor dispute; as an activity by which workers, without a
complete stoppage of work, retard production or their performance of duties and functions to
compel management to grant their demands. The Court also agrees that such a slowdown is
generally condemned as inherently illicit and unjustifiable, because while the employees
continue to work and remain at their positions and accept the wages paid to them, they at the
same time select what part of their allotted tasks they care to perform of their own volition or
refuse openly or secretly, to the employers damage, to do other work; in other words, they work
on their own terms. x x x.[24]

Finally, the Court cannot agree with the proposition that respondent company, in extending
substantial separation package to some officers of petitioner union during the pendency of this
case, in effect, condoned the illegal acts they committed.
Respondent company correctly postured that at the time these union officers obtained their
separation benefits, they were still considered employees of the company. Hence, the company
was merely complying with its legal obligations.[25] Respondent company could have withheld
these benefits pending the final resolution of this case. Yet, considering perhaps the financial
hardships experienced by its employees and the economic situation prevailing, respondent
company chose to let its employees avail of their separation benefits. The Court views the gesture
of respondent company as an act of generosity for which it should not be punished.
WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision
of the Court of Appeals is AFFIRMED.
SO ORDERED.

CL SHIPPING PHILIPPINES, G.R. No. 153031

INC. and U-MING MARINE
TRANSPORT CORPORATION, Present:
Petitioners,

PANGANIBAN, C.J.
YNARES-SANTIAGO,
(Working Chairperson)
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR. and
CHICO-NAZARIO, JJ.
NATIONAL LABOR
RELATIONS COMMISSION Promulgated:
and STEVE RUSEL,
Respondents. December 14, 2006
x------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the Decision[1] of the Court of Appeals (CA) dated December 18,
2001 in CA-G.R. SP No. 59976, which affirmed the Decision of the National Labor
Relations Commission (NLRC) dated March 22, 2000 in NLRC NCR CA No.
018120-99; and the Resolution of the CA dated April 10, 2002, denying petitioners
motion for reconsideration.[2]
The facts of the case, as found by the CA, are as follows:
In April 1996, Rusel was employed as GP/AB seaman by manning
agency, PCL Shipping Philippines, Inc. (PCL Shipping) for and in behalf
of its foreign principal, U-Ming Marine Transport Corporation (U-Ming
Marine). Rusel thereby joined the vessel MV Cemtex General (MV
Cemtex) for the contract period of twelve (12) months with a basic
monthly salary of US$400.00, living allowance of US$140.00, fixed
overtime rate of US$120.00 per month, vacation leave with pay of
US$40.00 per month and special allowance of US$175.00.

On July 16, 1996, while Rusel was cleaning the vessels kitchen, he
slipped, and as a consequence thereof, he suffered a broken and/or
sprained ankle on his left foot. A request for medical examination was
flatly denied by the captain of the vessel. On August 13, 1996, feeling an
unbearable pain in his ankle, Rusel jumped off the vessel using a life
jacket and swam to shore. He was brought to a hospital where he was
confined for eight (8) days.

On August 22, 1996, a vessels agent fetched Rusel from the

hospital and was required to board a plane bound for the Philippines.

On September 26, 1996, Rusel filed a complaint for illegal

dismissal, non-payment of wages, overtime pay, claim for medical
benefits, sick leave pay and damages against PCL Shipping and U-Ming
Marine before the arbitration branch of the NLRC. In their answer, the
latter alleged that Rusel deserted his employment by jumping off the
vessel.

On July 21, 1998, the labor arbiter rendered his decision, the
dispositive portion of which reads as follows:

Wherefore, above premises duly considered we find the

respondent liable for unjust repatriation of the complainant.

Accordingly, the following award is hereby adjudged against the

respondent:

1. The amount of $2,625.00 or its peso equivalent at the time of

payment representing three (3) months salary of the complainant due to
his illegal dismissal.
2. The amount of $1,600.00 or its peso equivalent, representing
sick wage benefits.
 3. The amount of $550.00 or its peso equivalent, representing
living allowance, overtime pay and special allowance for two (2) months.

4. The amount of $641.66 or its peso equivalent, representing

unpaid wages from August 11 to 22, 1996.

5. Attorneys fees equivalent to 10% of the total monetary award.

The rest of the claims are dismissed for lack of merit.

SO ORDERED.[3]

Aggrieved by the Decision of the Labor Arbiter, herein petitioners appealed

to the NLRC. In its Decision dated March 22, 2000, the NLRC affirmed the findings
of the Labor Arbiter but modified the appealed Decision, disposing as follows:

WHEREFORE, premises considered, the assailed decision is as it

is hereby ordered MODIFIED in that the amount representing three
months salary of the complainant due to his illegal dismissal is reduced to
US$1,620.00. Further the award of sick wage benefit is deleted.

All other dispositions are AFFIRMED.

SO ORDERED.[4]

Petitioners filed a Motion for Reconsideration but the NLRC denied the same
in its Decision of May 3, 2000.[5]

Petitioners filed a petition for certiorari with the CA.[6] In its Decision
dated December 18, 2001, the CA dismissed the petition and affirmed the NLRC
Decision.[7]

Petitioners filed a Motion for Reconsideration but it was denied by the CA in its
Resolution dated April 10, 2002.[8]

Hence, the instant petition with the following assignment of errors:

I. The Court of Appeals erred in ruling that private respondent was

illegally dismissed from employment.

xxxx
 II. Likewise, the Court of Appeals erred in not upholding
petitioners right to pre-terminate private respondents employment.
xxxx

III. The private respondent is not entitled to other money claims,

particularly as to the award of attorneys fees.[9]

As to their first assigned error, petitioners contend that the CA erred in

affirming the findings of the NLRC that Rusels act of jumping ship does not establish
any intent on his part to abandon his job and never return. Petitioners argue that
Rusels very act of jumping from the vessel and swimming to shore is evidence of
highest degree that he has no intention of returning to his job. Petitioners further
contend that if Rusel was indeed suffering from unbearable and unmitigated pain, it
is unlikely that he is able to swim two (2) nautical miles, which is the distance
between their ship and the shore, considering that he needed to use his limbs in
swimming. Petitioners further assert that it is error on the part of the CA to disregard
the entries contained in the logbook and in the Marine Note Protest evidencing
Rusels offense of desertion because while these pieces of evidence were belatedly
presented, the settled rule is that additional evidence may be admitted on appeal in
labor cases. Petitioners also contend that Rusels act of desertion is a grave and
serious offense and considering the nature and situs of employment as well as the
nationality of the employer, the twin requirements of notice and hearing before an
employee can be validly terminated may be dispensed with.

As to their second assigned error, petitioners contend that assuming, for the
sake of argument, that Rusel is not guilty of desertion, they invoked the alternative
defense that the termination of his employment was validly made pursuant to
petitioners right to exercise their prerogative to pre-terminate such employment in
accordance with Section 19(C) of the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers On-Board Ocean-Going Vessels, which provision
was incorporated in Rusels Contract of Employment with petitioners. Petitioners
assert that despite the fact that this issue was raised before the CA, the appellate
court failed to resolve the same.
 Anent the last assigned error, petitioners argue that it is error on the part of
the CA to affirm the award of living allowance, overtime pay, vacation pay and
special allowance for two months because Rusel failed to submit substantial
evidence to prove that he is entitled to these awards. Petitioners further argue that
these money claims, particularly the claim for living allowance, should not be
granted because they partake of the nature of earned benefits for services rendered
by a seafarer. Petitioners also contend that the balance of Rusels wages from August
11-22, 1996 should be applied for the payment of the costs of his repatriation,
considering that under Section 19(E) of the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels,
when a seafarer is discharged for any just cause, the employer shall have the right to
recover the costs of his replacement and repatriation from the seafarers wages and
other earnings. Lastly, petitioners argue that the award of attorneys fees should be
deleted because there is nothing in the decision of the Labor Arbiter or the NLRC
which states the reason why attorneys fees are being awarded.

In his Comment, private respondent contends that petitioners are raising issues
of fact which have already been resolved by the Labor Arbiter, NLRC and the CA.
Private respondent argues that, aside from the fact that the issues raised were already
decided by three tribunals against petitioners favor, it is a settled rule that only
questions of law may be raised in a petition for review on certiorari under Rule 45
of the Rules of Court. While there are exceptions to this rule, private respondent
contends that the instant case does not fall under any of these exceptions. Private
respondent asserts that petitioners failed to substantiate their claim that the former is
guilty of desertion. Private respondent further contends that the right to due process
is available to local and overseas workers alike, pursuant to the provisions of the
Constitution on labor and equal protection as well as the declared policy contained
in the Labor Code. Private respondent argues that petitioners act of invoking the
provisions of Section 19(C) of the POEA Contract as an alternative defense is
misplaced and is inconsistent with their primary defense that private respondent was
dismissed on the ground of desertion. As to the award of attorneys fees, private
respondent contends that since petitioners act compelled the former to incur
expenses to protect his interest and enforce his lawful claims, and because petitioners
acted in gross and evident bad faith in refusing to satisfy private respondents lawful
claims, it is only proper that attorneys fees be awarded in favor of the latter. Anent
the other monetary awards, private respondent argues that these awards are all
premised on the findings of the Labor Arbiter, NLRC and the CA that private
respondents dismissal was improper and illegal.

The Court finds the petition without merit.

Anent the first assigned error, it is a settled rule that under Rule 45 of the
Rules of Court, only questions of law may be raised in this Court.[10] Judicial review
by this Court does not extend to a re-evaluation of the sufficiency of the evidence
upon which the proper labor tribunal has based its determination.[11] Firm is the
doctrine that this Court is not a trier of facts, and this applies with greater force in
labor cases.[12] Factual issues may be considered and resolved only when the findings
of facts and conclusions of law of the Labor Arbiter are inconsistent with those of
the NLRC and the CA.[13] The reason for this is that the quasi-judicial agencies, like
the Arbitration Board and the NLRC, have acquired a unique expertise because their
jurisdiction are confined to specific matters.[14] In the present case, the question of
whether private respondent is guilty of desertion is factual. The Labor Arbiter,
NLRC and the CA are unanimous in their findings that private respondent is not
guilty of desertion and that he has been illegally terminated from his
employment. After a review of the records of the instant case, this Court finds no
cogent reason to depart from the findings of these tribunals.

Petitioners assert that the entries in the logbook of MV Cemtex General[15] and
in the Marine Note Protest[16] which they submitted to the NLRC confirm the fact
that private respondent abandoned the vessel in which he was assigned. However,
the genuineness of the Marine Note Protest as well as the entries in the logbook are
put in doubt because aside from the fact that they were presented only during
petitioners Motion for Reconsideration filed with the NLRC, both the Marine Note
Protest and the entry in the logbook which were prepared by the officers of the vessel
were neither notarized nor authenticated by the proper authorities. Moreover, a
reading of these entries simply shows that private respondent was presumed to have
deserted his post on the sole basis that he was found missing while
the MV Cemtex General was anchored at the port of Takehara, Japan. Hence,
without any corroborative evidence, these documents cannot be used as bases for
concluding that private respondent was guilty of desertion.
 Petitioners also question the findings and conclusion of the Labor Arbiter and
the NLRC that what caused private respondent in jumping overboard was the
unmitigated pain he was suffering which was compounded by the inattention of the
vessels captain to provide him with the necessary treatment inspite of the fact that
the ship was moored for about two weeks at the anchorage of Takehara, Japan; and,
that private respondents act was a desperate move to protect himself and to seek
relief for his physical suffering. Petitioners contend that the findings and conclusions
of the Labor Arbiter and the NLRC which were affirmed by the CA are based on
conjecture because there is no evidence to prove that, at the time he jumped ship,
private respondent was really suffering from an ankle injury.

It is true that no substantial evidence was presented to prove that the cause of
private respondents confinement in a hospital in Takehara, Japan was his ankle
injury. The Court may not rely on the letter marked as Annex B and attached to
private respondents Position Paper because it was unsigned and it was not
established who executed the same.[17] However, the result of the x-ray examination
conducted by the LLN Medical Services, Inc. on August 26, 1996, right after private
respondent was repatriated to the Philippines, clearly showed that there is a soft-
tissue swelling around his ankle joint.[18] This evidence is consistent with private
respondents claim that he was then suffering from an ankle injury which caused him
to jump off the ship.

As to petitioners contention that private respondent could not have traversed

the distance between the ship and the shore if he was indeed suffering from
unbearable pain by reason of his ankle injury, suffice it to say that private respondent
is an able-bodied seaman and that with the full use of both his arms and the help of
a life jacket, was able to reach the shore.

As correctly defined by petitioners, desertion, in maritime law is:

The act by which a seaman deserts and abandons a ship or vessel,

in which he had engaged to perform a voyage, before the expiration of his
time, and without leave. By desertion, in maritime law, is meant, not a
mere unauthorized absence from the ship, without leave, but an
unauthorized absence from the ship with an intention not to return to
her service; or as it is often expressed, animo non revertendi, that is, with
an intention to desert.[19] (emphasis supplied)
Hence, for a seaman to be considered as guilty of desertion, it is essential that there
be evidence to prove that if he leaves the ship or vessel in which he had engaged to
perform a voyage, he has the clear intention of abandoning his duty and of not
returning to the ship or vessel. In the present case, however, petitioners failed to
present clear and convincing proof to show that when private respondent jumped
ship, he no longer had the intention of returning. The fact alone that he jumped off
the ship where he was stationed, swam to shore and sought medical assistance for
the injury he sustained is not a sufficient basis for petitioners to conclude that he had
the intention of deserting his post. Settled is the rule that in termination cases, the
burden of proof rests upon the employer to show that the dismissal is for a just and
valid cause.[20] The case of the employer must stand or fall on its own merits and not
on the weakness of the employees defense.[21] In the present case, since petitioners
failed to discharge their burden of proving that private respondent is guilty of
desertion, the Court finds no reason to depart from the conclusion of the Labor
Arbiter, NLRC and the CA that private respondents dismissal is illegal.

In their second assigned error, petitioners cite Section 19(C) of POEA

Memorandum Circular No. 055-96[22] known as the Revised Standard Employment
Terms and Conditions Governing the Employment of Filipino Seafarers On Board
Ocean-Going Vessels as their alternative basis in terminating the employment of
private respondent. Said Section provides as follows:

Section 19. REPATRIATION

xxxx

C. If the vessel arrives at a convenient port within a period of three

months before the expiration of his contract, the master/
employer may repatriate the seafarer from such port provided
that the seafarer shall be paid all his earned wages. In addition,
the seafarer shall also be paid his leave pay for the entire
contract period plus a termination pay equivalent to one (1)
month of his basic pay, provided, however, that this mode of
termination may only be exercised by the master/employer if the
original contract period of the seafarer is at least ten (10)
months; provided, further, that the conditions for this mode of
termination shall not apply to dismissal for cause.
 The Court is not persuaded. POEA Memorandum Circular No. 055-96 took
effect on January 1, 1997 while the contract of employment entered into by and
between private respondent and petitioners was executed on April 10, 1996. Hence,
it is wrong for petitioners to cite this particular Memorandum because at the time of
petitioners and private respondents execution of their contract of employment
Memorandum Circular No. 055-96 was not yet effective.

What was in effect at the time private respondents Contract of Employment

was executed was POEA Memorandum Circular No. 41, Series of 1989. It is clearly
provided under the second paragraph of private respondents Contract of
Employment that the terms and conditions provided under Memorandum Circular
No. 41, Series of 1989 shall be strictly and faithfully observed. Hence, it is
Memorandum Circular No. 41, Series of 1989 which governs private respondents
contract of employment.

Section H (6), Part I of Memorandum Circular No. 41, which has almost
identical provisions with Section 19 (C) of Memorandum Circular No. 055-96,
provides as follows:
SECTION H. TERMINATION OF EMPLOYMENT

xxxx

6. If the vessel arrives at a convenient port within a period of three

(3) months before the expiration of the Contract, the master/employer may
repatriate the seaman from such port provided that the seaman shall be
paid all his earned wages. In addition, the seaman shall also be paid his
leave pay for the entire contract period plus a termination pay equivalent
to one (1) month of his basic pay, provided, however, that this mode of
termination may only be exercised by the master/employer if the original
contact period of the seaman is at least ten (10) months; provided, further,
that the conditions for this mode of termination shall not apply to dismissal
for cause.

The Court agrees with private respondents contention that petitioners

arguments are misplaced. Petitioners may not use the above-quoted provision as
basis for terminating private respondents employment because it is incongruent with
their primary defense that the latters dismissal from employment was for
cause. Petitioners may not claim that they ended private respondents services
because he is guilty of desertion and at the same time argue that they exercised their
option to prematurely terminate his employment, even without cause, simply
because they have the right to do so under their contract. These grounds for
termination are inconsistent with each other such that the use of one necessarily
negates resort to the other. Besides, it appears from the records that petitioners
alternative defense was pleaded merely as an afterthought because it was only in
their appeal with the NLRC that they raised this defense. The only defense raised by
petitioners in their Answer with Counterclaim filed with the office of the Labor
Arbiter is that private respondent was dismissed from employment by reason of
desertion.[23] Under the Rules of Court,[24] which is applicable in a suppletory
character in labor cases before the Labor Arbiter or the NLRC pursuant to Section
3, Rule I of the New Rules of Procedure of the NLRC[25], defenses which are not
raised either in a motion to dismiss or in the answer are deemed waived.[26]

Granting, for the sake of argument, that petitioners may use Section H (6),
Part I of Memorandum Circular No. 41 or Section 19(C) of Memorandum Circular
No. 055-96 as basis for terminating private respondents employment, it is clear that
one of the conditions before any of these provisions becomes applicable is when the
vessel arrives at a convenient port within a period of three (3) months before the
expiration of the contract of employment. In the present case, private respondents
contract was executed on April 10, 1996 for a duration of twelve months. He was
deployed aboard MV Cemtex General on June 25, 1996 and repatriated to
the Philippines on August 22, 1996. Hence, it is clear that petitioners did not meet
this condition because private respondents termination was not within a period of
three months before the expiration of his contract of employment.

Moreover, the Court finds nothing in the records to show that petitioners
complied with the other conditions enumerated therein, such as the payment of all
of private respondents earned wages together with his leave pay for the entire
contract period as well as termination pay equivalent to his one month salary.

Petitioners admit that they did not inform private respondent in writing of the
charges against him and that they failed to conduct a formal investigation to give
him opportunity to air his side. However, petitioners contend that the twin
requirements of notice and hearing applies strictly only when the employment is
within the Philippines and that these need not be strictly observed in cases of
international maritime or overseas employment.

The Court does not agree. The provisions of the Constitution as well as the
Labor Code which afford protection to labor apply to Filipino employees whether
working within the Philippines or abroad. Moreover, the principle of lex loci
contractus (the law of the place where the contract is made) governs in this
jurisdiction.[27] In the present case, it is not disputed that the Contract of Employment
entered into by and between petitioners and private respondent was executed here in
the Philippines with the approval of the Philippine Overseas Employment
Administration (POEA). Hence, the Labor Code together with its implementing
rules and regulations and other laws affecting labor apply in this
case.[28] Accordingly, as to the requirement of notice and hearing in the case of a
seafarer, the Court has already ruled in a number of cases that before a seaman can
be dismissed and discharged from the vessel, it is required that he be given a written
notice regarding the charges against him and that he be afforded a formal
investigation where he could defend himself personally or through a
representative.[29] Hence, the employer should strictly comply with the twin
requirements of notice and hearing without regard to the nature and situs of
employment or the nationality of the employer. Petitioners failed to comply with
these twin requirements.

Petitioners also contend that the wages of private respondent from August 11-
22, 1996 were applied to the costs of his repatriation. Petitioners argue that the off-
setting of the costs of his repatriation against his wages for the aforementioned
period is allowed under the provisions of Section 19(E) of Memorandum Circular
No. 055-96 which provides that when the seafarer is discharged for any just cause,
the employer shall have the right to recover the costs of his replacement and
repatriation from the seafarers wages and other earnings.

The Court does not agree. Section 19(E) of Memorandum Circular No. 055-
96 has its counterpart provision under Section H (2), Part II of Memorandum
Circular No. 41, to wit:

SECTION H. REPATRIATION
 xxxx

2. When the seaman is discharged for disciplinary reasons, the

employer shall have the right to recover the costs of maintenance and
repatriation from the seamans balance of wages and other earnings.

xxxx

It is clear under the above-quoted provision that the employer shall have the right to
recover the cost of repatriation from the seamans wages and other earnings only if
the concerned seaman is validly discharged for disciplinary measures. In the present
case, since petitioners failed to prove that private respondent was validly terminated
from employment on the ground of desertion, it only follows that they do not have
the right to deduct the costs of private respondents repatriation from his wages and
other earnings.

Lastly, the Court is not persuaded by petitioners contention that the private
respondent is not entitled to his money claims representing his living allowance,
overtime pay, vacation pay and special allowance as well as attorneys fees because
he failed to present any proof to show that he is entitled to these awards.

However, the Court finds that the monetary award representing private
respondents three months salary as well as the award representing his living
allowance, overtime pay, vacation pay and special allowance should be modified.

The Court finds no basis in the NLRCs act of including private respondents
living allowance as part of the three months salary to which he is entitled under
Section 10 of Republic Act (RA) No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995. The pertinent provisions of the said
Act provides:

Sec. 10. Money Claims

xxxx

In case of termination of overseas employment without just, valid

or authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest at
 twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.

xxxx

It is clear from the above-quoted provision that what is included in the computation
of the amount due to the overseas worker are only his salaries. Allowances are
excluded. In the present case, since private respondent received a basic monthly
salary of US$400.00, he is, therefore, entitled to receive a sum of US$1200.00,
representing three months of said salary.

As to the awards of living allowance, overtime pay, vacation pay and special
allowance, it is clearly provided under private respondents Contract of Employment
that he is entitled to these benefits as follows: living allowance of US$140.00/month;
vacation leave with pay equivalent to US$40.00/month; overtime rate of
US$120.00/month; and, special allowance of US$175.00/month.[30]

With respect, however, to the award of overtime pay, the correct criterion in
determining whether or not sailors are entitled to overtime pay is not whether they
were on board and can not leave ship beyond the regular eight working hours a day,
but whether they actually rendered service in excess of said number of hours.[31] In
the present case, the Court finds that private respondent is not entitled to overtime
pay because he failed to present any evidence to prove that he rendered service in
excess of the regular eight working hours a day.

On the basis of the foregoing, the remaining benefits to which the private
respondent is entitled is the living allowance of US$140.00/month, which was
removed in the computation of private respondents salary, special allowance of
US$175.00/month and vacation leave with pay amounting to US$40.00/month.
Since private respondent rendered service for two months these benefits should be
doubled, giving a total of US$710.00.

As to the award of attorneys fees, this Court ruled in Reyes v. Court of

Appeals,[32] as follows:
 x x x [T]here are two commonly accepted concepts of attorney's
fees, the so-called ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer by his client
for the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement with the
client. In its extraordinary concept, attorneys fees are deemed indemnity
for damages ordered by the court to be paid by the losing party in a
litigation. The instances where these may be awarded are those
enumerated in Article 2208 of the Civil Code, specifically par. 7 thereof
which pertains to actions for recovery of wages, and is payable not to the
lawyer but to the client, unless they have agreed that the award shall
pertain to the lawyer as additional compensation or as part thereof. The
extraordinary concept of attorneys fees is the one contemplated in Article
111 of the Labor Code, which provides:

Art. 111. Attorneys fees. (a) In cases of unlawful

withholding of wages, the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of
wages recovered x x x

The afore-quoted Article 111 is an exception to the declared

policy of strict construction in the awarding of attorneys
fees. Although an express finding of facts and law is still necessary to
prove the merit of the award, there need not be any showing that the
employer acted maliciously or in bad faith when it withheld the wages.
There need only be a showing that the lawful wages were not paid
accordingly, as in this case.
In carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the employees welfare should be the primordial
and paramount consideration. This kind of interpretation gives meaning
and substance to the liberal and compassionate spirit of the law as
provided in Article 4 of the Labor Code which states that [a]ll doubts in
the implementation and interpretation of the provisions of [the Labor]
Code including its implementing rules and regulations, shall be resolved
in favor of labor, and Article 1702 of the Civil Code which provides that
[i]n case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the
laborer.[33] (Emphasis supplied)
In the present case, it is true that the Labor Arbiter and the NLRC failed to state the
reasons why attorneys fees are being awarded. However, it is clear that private
respondent was illegally terminated from his employment and that his wages and
other benefits were withheld from him without any valid and legal basis. As a
consequence, he is compelled to file an action for the recovery of his lawful wages
and other benefits and, in the process, incurred expenses. On these bases, the Court
finds that he is entitled to attorneys fees.

WHEREFORE, the petition is PARTLY GRANTED. The Court of

Appeals Decision dated December 18, 2001 and Resolution dated April 10,
2002 are AFFIRMEDwith MODIFICATION to the effect that the award of
US$1620.00 representing private respondents three months salary is reduced to
US$1200.00. The award of US$550.00 representing private respondents living
allowance, overtime pay, vacation pay and special allowance for two months is
deleted and in lieu thereof, an award of US$710.00 is granted representing private
respondents living allowance, special allowance and vacation leave with pay for the
same period.

OWEL Z. ZUBISTA, and ORLANDO P.

TABOY, Petitioners, v. COURT OF APPEALS (Special Twelfth
Division), STA. CLARA INTERNATIONAL TRANSPORT AND
EQUIPMENT CORPORATION, and NICANDRO
LINAO, Respondents.

DECISION

QUISUMBING, J.:

Assailed in this Petition for Review are the Decision1 dated June 21,
2005 and the Resolution2 dated August 22, 2005 of the Court of
Appeals in CA-G.R. SP No. 76096, which affirmed the
Resolution3 dated May 20, 2002 of the National Labor Relations
Commission (NLRC). The NLRC had affirmed the decision4 of the
Labor Arbiter in NLRC Case No. NCR-00-09-09578-99, dismissing
petitioners' complaint for constructive dismissal but ordering the
payment of their holiday pay, accrued sick and vacation leaves and
wage differential.

The antecedent facts culled from the submissions below are as

follows:
Petitioners Lazaro V. Dacut, Cesario G. Cajote, Romerlo F. Tungala,
Lowel Z. Zubista, and Orlando P. Taboy were crew members of the
LCT "BASILISA", an inter-island cargo vessel owned by private
respondent Sta. Clara International Transport and Equipment
Corporation.

On November 29, 1998, Dacut discovered a hole in the vessel's

engine room. The company had the hole patched up with a piece of
iron and cement. Despite the repair, Dacut and Tungala resigned in
July 1999 due to the vessel's alleged unseaworthiness.5

On the other hand, Cajote went on leave from April 12-28, 1999 to
undergo eye treatment. Since then, he has incurred several
unauthorized absences. Fearing that he will be charged as Absent
Without Leave (AWOL), Cajote resigned in June 1999.6

On September 22, 1999, petitioners filed a complaint7 for

constructive dismissal amounting to illegal dismissal (except for
Zubista and Taboy); underpayment of wages, special and regular
holidays; non-payment of rest days, sick and vacation leaves, night
shift differentials, subsistence allowance, and fixed overtime pay;
actual, moral and exemplary damages; and litigation costs and
attorney's fees.

Dacut and Tungala claimed that they resigned after Reynalyn G.

Orlina, the secretary of the Personnel Manager, told them that they
will be paid their separation pay if they voluntarily resigned. They
also resigned because the vessel has become unseaworthy after the
company refused to have it repaired properly.8 Meanwhile, Cajote
alleged that he resigned because the company hired a replacement
while he was still on leave. When he returned, the Operations
Manager told him that he will be paid his separation pay if he
voluntarily resigned; otherwise, he would be charged for being
AWOL. On the other hand, Zubista claimed that his wage was below
the minimum set by the Regional Tripartite Wages and Productivity
Board. Finally, petitioners alleged that they were not paid their rest
days, sick and vacation leaves, night shift differentials, subsistence
allowance, and fixed overtime pay.
After the Labor Arbiter declared the case submitted for decision, the
company filed its reply to petitioners' position paper. It countered
that Dacut and Tungala voluntarily resigned due to the vessel's
alleged unseaworthiness while Cajote resigned to avoid being
charged as AWOL. It also claimed that petitioners' monetary claims
had no basis.

On August 2, 2000, the Labor Arbiter dismissed petitioners'

complaint. The Labor Arbiter ruled that there was sufficient evidence
to prove that the vessel was seaworthy. Thus, the fear of Dacut and
Tungala was unfounded, and they must bear the consequence of
their resignation. The Labor Arbiter also observed that Cajote has
incurred excessive unauthorized absences which would warrant his
dismissal under the Labor Code. Thus, the Labor Arbiter upheld the
company's position that Cajote resigned to avoid being charged as
AWOL. Finally, the Labor Arbiter noted that except for the holiday
pay, accrued sick and vacation leaves, and wage differential,
petitioners failed to substantiate their monetary claims. The Labor
Arbiter thus held:

WHEREFORE, the foregoing premises considered, judgment is

hereby rendered dismissing complainants' charge for constructive
dismissal and the concomitant prayer that goes therewith for lack of
merit. However, respondent is ordered to pay the following:

1. [Complainants'] holiday pay and the cash equivalent of their

accrued sick leave/vacation leave credits to:

Holiday Pay Accrued

Regular Special S/L - V/L Credits

Dacut P1,000.00 P1,099.98 P8,365.35
Tungala P 933.32 P 756.66 P7,850.00
Cajote P1,292.30 P 682.95 P2,100.00
Zubista P 923.04 P 714.98 P2,600.00
Taboy P1,307.68 P1,076.91 P5,000.00
[Total] P5,456.34 P4,331.48 P25,915.35
2. Zubista's wage differential amounting to THIRTY-FOUR
THOUSAND SIX HUNDRED EIGHTY-SEVEN PESOS and 70/100
(P34,687.70)[.]

SO ORDERED.9

Petitioners appealed to the NLRC alleging that the Labor Arbiter

erred: (1) in entertaining the company's reply after the case had
been submitted for decision; (2) in not finding that Dacut, Cajote
and Tungala were constructively dismissed; (3) in not finding that
petitioners were entitled to their monetary claims; and (4) in not
finding that petitioners were entitled to actual, moral and exemplary
damages as well as litigation costs and attorney's fees. At this point,
Dacut and Tungala further contended that they resigned because
they were being harassed by the company due to a complaint for
violation of labor standards they had filed earlier against it.

On May 20, 2002, the NLRC affirmed the Labor Arbiter's

decision.10 The NLRC clarified that although the Labor Arbiter has
declared the case submitted for decision, the Labor Arbiter may still
entertain the company's reply in order to ascertain the facts of the
case. The NLRC also declared that Dacut, Cajote and Tungala
voluntarily executed their resignation letters.
chanrobles v irt ual law l ibra ry

Petitioners elevated the case to the Court of Appeals which likewise

affirmed the findings of the NLRC. Petitioners now come before us
alleging that the appellate court committed serious errors of law:

I.

'in holding that there was nothing irregular in admitting

respondents' belatedly submitted reply and making the same the
primary basis of the decision despite the fact that petitioners had
not been given the chance to refute its contents.

II.

'IN HOLDING THAT PETITIONERS LAZARO DACUT, [ET] AL.

VOLUNTARILY RESIGNED FROM THEIR EMPLOYMENT AND WERE
NOT CONSTRUCTIVELY DISMISSED.
 III.

'IN RULING THAT PETITIONERS [WERE] NOT ENTITLED TO THEIR

OTHER MONETARY CLAIMS.11

Essentially, we are asked to resolve: (1) whether the Labor Arbiter

erred in admitting the company's reply after the case had been
submitted for decision; (2) whether Dacut, Tungala and Cajote
voluntarily resigned from their employment; and (3) whether
petitioners were entitled to their monetary claims. chanroble s virtual law lib rary

The first issue deals with technical rules and procedural matters.
Well-settled is the rule that technical rules of procedure are not
binding in labor cases.12 In fact, it is the spirit and intention of the
Labor Code that labor officials shall use all reasonable means to
ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure.13

In our view, the fact that the Labor Arbiter admitted the company's
reply after the case had been submitted for decision did not make
the proceedings before him irregular. Petitioners were given
adequate opportunity in the NLRC and the Court of Appeals to rebut
the company's evidence against them.

The second and third issues require a review of factual matters.

Under Rule 45 of the Rules of Court, a Petition for Review
on Certiorari shall only raise questions of law considering that the
findings of fact of the Court of Appeals are, as a general rule,
conclusive upon and binding on this Court. This doctrine applies with
greater force in labor cases where the factual findings of the labor
tribunals are affirmed by the Court of Appeals. The reason is that
labor officials are deemed to have acquired expertise in matters
within their jurisdiction and therefore, their factual findings are
generally accorded not only respect but also finality.14

Here, the Labor Arbiter, the NLRC, and the Court of Appeals were
unanimous in finding that the primary reason why Dacut and
Tungala resigned was the vessel's alleged unseaworthiness as borne
by their pleadings before the Labor Arbiter. Dacut and Tungala
never mentioned that they resigned because they were being
harassed by the company due to a complaint for violation of labor
standards they had filed against it. This ground was alleged only
before the NLRC and not a single act or incident was cited to prove
this point. Even the alleged assurance by Orlina, that they would be
given separation pay, served merely as a secondary reason why
they resigned. In fact, we doubt that such assurance was even
made considering that as secretary of the Personnel Manager, it was
not shown under what authority Orlina acted when she told Dacut
and Tungala to resign.

Likewise deserving scant consideration is Cajote's claim that the

Operations Manager told him that he will be paid separation pay if
he resigned voluntarily; otherwise, he would be charged as AWOL.
Although the company already hired a replacement, Cajote admitted
that he was still employed at the time he resigned. In fact, the
company tried to give him another assignment but he refused it.
Thus, the only reason why Cajote resigned was his long
unauthorized absences which would have warranted his dismissal in
any case.

We find no reason to disturb all these factual findings because they

are amply supported by substantial evidence.

Apropos the monetary claims, there is insufficient evidence to prove

petitioners' entitlement thereto. As crew members, petitioners were
required to stay on board the vessel by the very nature of their
duties, and it is for this reason that, in addition to their regular
compensation, they are given free living quarters and subsistence
allowances when required to be on board. It could not have been
the purpose of our law to require their employers to give them
overtime pay or night shift differential, even when they are not
actually working. Thus, the correct criterion in determining whether
they are entitled to overtime pay or night shift differential is not
whether they were on board and cannot leave ship beyond the
regular eight working hours a day, but whether they actually
rendered service in excess of said number of hours.15 In this case,
petitioners failed to submit sufficient proof that overtime and night
shift work were actually performed to entitle them to the
corresponding pay.
WHEREFORE, the instant petition is DENIED. The Decision dated
June 21, 2005 and the Resolution dated August 22, 2005 of the
Court of Appeals in CA-G.R. SP No. 76096 are AFFIRMED.

SO ORDERED.

BAHIA SHIPPING SERVICES, G.R. No. 162195

INC.,
Petitioner, Present:

AUSTRIA-MARTINEZ, J.,
Acting Chairperson,
- versus - TINGA,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

REYNALDO CHUA, Promulgated:

Respondent. April 8, 2008
x-------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
wherein Bahia Shipping Services, Inc. (petitioner) assails the August 28, 2003 Decision[1] of
the Court of Appeals (CA), affirming the December 23, 1998 Decision and February 15,
1999 Resolution of the National Labor Relations Commission (NLRC); and the February
19, 2004 CA Resolution,[2] denying its Motion for Reconsideration.

Petitioner adopted the following findings of fact of the CA:

Private respondent Reynaldo Chua was hired by the petitioner shipping
company, Bahia Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship
liner M/S Black Watch pursuant to a Philippine Overseas Employment Administration
(POEA) approved employment contract dated October 9, 1996 for a period of nine (9)
months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private
 respondent left Manila for Heathrow, England to board the said sea vessel where he will be
assigned to work.

On February 15, 1997, the private respondent reported for his working station one and one-
half (1) hours late. On February 17, 1997, the master of the vessel served to the private
respondent an official warning-termination form pertaining to the said incident. On March 8,
1997, the vessel's master, ship captain Thor Fleten conducted an inquisitorial hearing to
investigate the said incident. Thereafter, on March 9, 1997, private respondent was dismissed
from the service on the strength of an unsigned and undated notice of dismissal. An alleged
record or minutes of the said investigation was attached to the said dismissal notice.

On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other
monetary claims, which case was assigned to Labor Arbiter Manuel M. Manansala.

The private respondent alleged that he was paid only US$300.00 per month as monthly
salary for five (5) months instead of US$410.00 as stipulated in his employment contract.
Thus, he claimed that he was underpaid in the amount of US$110.00 per month for that same
period of five (5) months. He further asserted that his salaries were also deducted US$20.00
per month by the petitioner for alleged union dues. Private respondent argued that it was his
first offense committed on board the vessel. He adverted further that the petitioner has no
proof of being a member of the AMOSUP or the ITF to justify its claim to deduct the said
union dues [from] his monthly salary.

The petitioner disputed the said allegations of the private respondent by arguing that it
received a copy of an addendum to the collective bargaining agreement (CBA) from the
petitioner's principal, BlackfriarsShipping Company, Ltd. Consequently, the petitioner
requested permission from the POEA through a letter dated March 17, 1997 to amend the
salary scale of the private respondent to US$300.00 per month. The petitioner justified its
monthly deduction made for union dues against the private respondent's salary in view of an
alleged existing CBA between the Norwegian Seaman's Union (NSU, for brevity) and the
petitioner's principal, Blackfriars Shipping Co., Ltd. The petitioner further asseverated that
the private respondent has violated the terms and conditions of his contract as manifested in
the said official warning-termination form by always coming late when reporting for duty
even prior to the February 15, 1997 incident.[3]

The Labor Arbiter rendered a Decision dated March 5, 1998, holding petitioner liable to
respondent for illegal dismissal and unauthorized deductions, viz:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring [petitioner] Bahia Shipping Services, Inc. (BSSI) and its foreign
principal Blackfriars Shipping Co., Ltd. (BSCL) guilty of illegal dismissal. Accordingly,
the aforenamed [petitioner] BSSI and its foreign principal BSCL are hereby directed to pay
jointly and severally, [private respondent] Reynaldo Chua the sum of US$1,230.00 as earlier
computed, representing his salary for the unexpired portion of the contract of employment
 limited to three (3) months under Republic Act 8042, and convertible to Philippine currency
upon actual payment.
2. Directing the aforenamed [petitioner] BSSI and its foreign principal BSCL to pay,
jointly and severally, [private respondent] Reynaldo Chua the following money claims as
earlier computed:
Reimbursement/Refund of Plane Fare ---- US$ 638.99
Illegal Deductions (Union Dues) ---- 100.00
Differential Pay (Underpayment of Wages) ---- 550.00
==========
US$1,288.99

convertible to Philippine currency upon actual payment.

3. Directing the aforenamed [petitioner] BSSI and its foreign principal BSCL to pay,
jointly and severally, the [private respondent] Reynaldo Chua ten (10%) percent attorney's
fees based on the total monetary award.

4. Dismissing the other money claims and/or charges of [private respondent]

Reynaldo Chua for lack of factual and legal basis.

SO ORDERED.[4]

Petitioner appealed to the NLRC which issued on December 23, 1998 a Decision,
the dispositive portion of which reads:

WHEREFORE, premises considered, the appealed Decision is hereby MODIFIED in that

the award on the unexpired portion of the contract is deducted the amount equivalent to a
day's work of complainant. The other findings stand AFFIRMED.

SO ORDERED.[5]

Petitioner filed a Motion for Reconsideration but the NLRC denied the same in a Resolution
dated February 15, 1999. [6]

Respondent did not question the foregoing NLRC decision and resolution.
Upon a petition for certiorari filed by petitioner, the CA rendered the August 28,
2003 Decision assailed herein, modifying the NLRC decision, thus:

WHEREFORE, premises considered, the assailed decision dated December 23, 1998, and
the resolution dated February 15, 1999, of the public respondent NLRC are hereby
AFFIRMED, with the MODIFICATION that the monetary award representing the salary of
the petitioner for the unexpired portion of the contract which is limited to three (3) months
under Republic Act No. 8042 is DELETED.

SO ORDERED.[7]
The CA denied petitioner's Motion for Reconsideration.

And so, the present petition raising the following issues:

a) Whether or not the Court of Appeals could grant additional affirmative relief by
increasing the award despite the fact that respondent did not appeal the decision of both the
Labor Arbiter and the NLRC.

b) Whether or not reporting for work one and one-half (1) hours late and abandoning
his work are valid grounds for dismissal.

c) Whether or not respondent is entitled to overtime pay which was incorporated in

his award for the unexpired portion of the contract despite the fact that he did not render
overtime work, and whether or not, it is proper for the NLRC to award money claims despite
the fact that the NLRC decision, and affirmed by the Court of Appeals, did not state clearly
the facts and the evidence upon which such conclusions are based.[8]

It is noted that petitioner does not question the monetary awards under Item Nos. 2 and 3 of
the dispositive portion of the LA Decision, which were affirmed in toto by the NLRC and
CA.

The issues will be resolved jointly.

The LA declared the dismissal of respondent illegal for the reason that the infraction he
committed of being tardy by 1 hour should not have been penalized by petitioner with the
ultimate punishment of termination; rather, the commensurate penalty for such single
tardiness would have been suspension for one or two weeks. The LA further noted that
petitioner meted out on respondent the penalty of dismissal hastily and summarily in that it
merely went through the motions of notifying respondent and hearing his side when, all
along, it had already decided to dismiss him.[9]
The NLRC sustained the foregoing findings of the LA, noting that the claim of petitioner
that respondent's tardiness was not infrequent but habitual is not supported by
evidence.[10] However, the NLRC held that, although the penalty of dismissal on respondent
was properly lifted, a penalty of deduction of one day's salary, the same to be subtracted from
his monetary award, should be imposed on the latter for the tardiness he incurred.[11]

The CA held that the NLRC and LA did not commit any grave abuse of discretion in arriving
at the factual assessments which are all supported by substantial evidence.[12]
Petitioner assails the ruling of the CA for being based on the faulty premise that respondent
incurred tardiness only once when in fact he had done so habitually.[13] Whether respondent
had been habitually tardy prior to February 15, 1997 when he reported for work 1 hours late
is purely factual in nature. As such, the Court defers to the concurrent assessments of the LA
and NLRC, as affirmed by the CA, for the evaluation of evidence and the appreciation of the
credibility of witnesses fall within their expertise.[14]

As the Court held in Acebedo Optical v . National Labor Relations

Commission,[15]

Judicial Review of labor cases does not go beyond the evaluation of the sufficiency
of the evidence upon which its labor officials findings rest. As such, the findings of facts and
conclusion of the NLRC are generally accorded not only great weight and respect but even
clothed with finality and deemed binding on this Court as long as they are supported by
substantial evidence.[16]

In the present case, petitioner has failed to establish a compelling reason for the Court
to depart from this rule. In fact, as pointed out by the CA, petitioner's claim that respondent's
tardiness was habitual lacks evidentiary support as no other documents on record were
attached to substantiate that the private respondent was forewarned for the first and second
time for any infraction or offense, work-related or not, vis--vis the performance of his regular
duties and functions.[17]

Such empty claim of petitioner, therefore, cannot persuade the Court to simply
disregard three layers of thorough and in-depth assessments on the matter by the CA, NLRC
and LA.

It being settled that the dismissal of respondent was illegal, it follows that the latter is entitled
to payment of his salary for the unexpired portion of his contract, as provided under Republic
Act (R.A.) No. 8042, considering that his employment was pre-terminated on March 9, 1997
or four months prior to the expiration of his employment contract on July 17, 1997.

However, the LA limited the award to an amount equivalent to respondent's salary for three
months. The NLRC affirmed said award but deducted therefrom his salary for one day as
penalty for the tardiness incurred. The CA affirmed the one-day salary deduction imposed
by the NLRC but removed the three months - salary cap imposed by the LA. In effect, as
this particular monetary award now stands, it is to be computed based on the salary of
respondent covering the period March 9, 1997 to July 17, 1997, less his salary for one day.
Petitioner questions the CA for lifting the three-month salary cap, pointing out that the LA
and NLRC decisions which imposed the cap can no longer be altered as said decisions where
not questioned by respondent.[18]

Indeed, a party who has failed to appeal from a judgment is deemed to have
acquiesced to it and can no longer obtain from the appellate court any affirmative relief other
that what was already granted under said judgment.[19] However, when strict adherence to
such technical rule will impair a substantive right, such as that of an illegally dismissed
employee to monetary compensation as provided by law, then equity dictates that the Court
set aside the rule to pave the way for a full and just adjudication of the case. As the Court
held in St. Michael's Institute v. Santos:[20]

On the matter of the award of backwages, petitioners advance the view that by
awarding backwages, the appellate court "unwittingly reversed a time-honored doctrine that
a party who has not appealed cannot obtain from the appellate court any affirmative relief
other than the ones granted in the appealed decision." We do not agree.

The fact that the NLRC did not award backwages to the respondents or that the respondents
themselves did not appeal the NLRC decision does not bar the Court of Appeals from
awarding backwages. While as a general rule, a party who has not appealed is not entitled to
affirmative relief other than the ones granted in the decision of the court below, the Court of
Appeals is imbued with sufficient authority and discretion to review matters, not
otherwise assigned as errors on appeal, if it finds that their consideration is necessary
in arriving at a complete and just resolution of the case or to serve the interests of justice
or to avoid dispensing piecemeal justice.

Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee
is entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is
no longer viable, and (b) backwages. Both are distinct reliefs given to alleviate the economic
damage suffered by an illegally dismissed employee and, thus, the award of one does not bar
the other. Both reliefs are rights granted by substantive law which cannot be defeated by
mere procedural lapses. Substantive rights like the award of backwages resulting from
illegal dismissal must not be prejudiced by a rigid and technical application of the rules.
The order of the Court of Appeals to award backwages being a mere legal consequence
of the finding that respondents were illegally dismissed by petitioners, there was no
error in awarding the same.[21] (Emphasis supplied)

The Court has consistently applied the foregoing exception to the general rule. It does so yet
again in the present case.

Section 10 of R.A. No. 8042,[22] entitles an overseas worker who has been illegally dismissed
to his salaries for the unexpired portion of the employment contract or for three (3) months
for every year of the unexpired term, whichever is less.[23]
 The CA correctly applied the interpretation of the Court in Marsaman Manning
Agency, Inc. v. National Labor Relations Commission[24] that the second option which
imposes a three months salary cap applies only when the term of the overseas contract is
fixed at one year or longer; otherwise, the first option applies in that the overseas worker
shall be entitled payment of all his salaries for the entire unexpired period of his contract.

In Skippers Pacific, Inc. v. Mira,[25] wherein the overseas contract involved was only
for six months, the Court held that it is the first option provided under Section 10 of R.A. No.
8042 which is applicable in that the overseas worker who was illegally dismissed is entitled
to payment of all his salaries covering the entire unexpired period of his contract. The CA
committed no error in adhering to the prevailing interpretation of Section 10 of R.A. No.
8042.

Finally, the Court comes to the last issue on whether in the computation of
the foregoing award, respondent's guaranteed overtime pay amounting to US$197.00 per
month should be included as part of his salary. Petitioner contends that there is no factual or
legal basis for the inclusion of said amount because, after respondent's repatriation, he could
not have rendered any overtime work.[26]
This time, petitioner's contention is well-taken.

The Court had occasion to rule on a similar issue in Stolt-Nielsen Marine Services (Phils.),
Inc. v. National Labor Relations Commission,[27] where the NLRC was questioned for
awarding to an illegally dismissed overseas worker fixed overtime pay equivalent to the
unexpired portion of the latter's contract. In resolving the question, the Court,
citing Cagampan v. National Labor Relations Commission,[28] held that although an
overseas employment contract may guarantee the right to overtime pay, entitlement to such
benefit must first be established, otherwise the same cannot be allowed.

Hence, it being improbable that respondent rendered overtime work during the unexpired
term of his contract, the inclusion of his guaranteed overtime pay into his monthly salary as
basis in the computation of his salaries for the entire unexpired period of his contract has no
factual or legal basis and the same should have been disallowed.

Based on respondents Position Paper filed with the Labor Arbiter,[29] his basic monthly salary
is $213.00.

WHEREFORE, the petition is PARTLY GRANTED. The assailed August 28, 2003
Decision and February 19, 2004 Resolution of the Court of Appeals
are AFFIRMED withMODIFICATION that in the computation of the payment to
respondent Reynaldo Chua of his salaries for the entire unexpired portion of his contract, his
basic monthly salary of US$213.00 shall be used as the sole basis.
BISIG MANGGAGAWA SA TRYCO G.R. No. 151309
and/or FRANCISCO SIQUIG, as Union
President, JOSELITO LARIO, Present:
VIVENCIO B. BARTE, SATURNINO
EGERA and SIMPLICIO AYA-AY, PUNO, C.J.,*
Petitioners, YNARES-SANTIAGO, J.,
Chairperson,
- versus - CHICO-NAZARIO,
NACHURA, and
NATIONAL LABOR RELATIONS REYES, JJ.
COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C. Promulgated:
RIVERA,
Respondents. October 15, 2008

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DECISION

NACHURA, J.:

This petition seeks a review of the Decision[1] of the Court of Appeals (CA)
dated July 24, 2001 and Resolution dated December 20, 2001, which affirmed the
finding of the National Labor Relations Commission (NLRC) that the petitioners
transfer to another workplace did not amount to a constructive dismissal and an
unfair labor practice.

The pertinent factual antecedents are as follows:

Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines

and its principal office is located in Caloocan City. Petitioners Joselito Lario,
Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees,
occupying the positions of helper, shipment helper and factory workers,
respectively, assigned to the Production Department. They are members of Bisig
Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-
and-file employees.

Tryco and the petitioners signed separate Memorand[a] of

Agreement[2] (MOA), providing for a compressed workweek schedule to be
implemented in the company effective May 20, 1996. The MOA was entered into
pursuant to Department of Labor and Employment Department Order (D.O.) No. 21,
Series of 1990, Guidelines on the Implementation of Compressed Workweek. As
provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours. The MOA
specifically stated that the employee waives the right to claim overtime pay for work
rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the
compressed workweek schedule is adopted in lieu of the regular workweek schedule
which also consists of 46 hours. However, should an employee be permitted or
required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay.

Tryco informed the Bureau of Working Conditions of the Department of

Labor and Employment of the implementation of a compressed workweek in the
company.[3]

In January 1997, BMT and Tryco negotiated for the renewal of their collective
bargaining agreement (CBA) but failed to arrive at a new agreement.

Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau
of Animal Industry of the Department of Agriculture reminding it that its production
should be conducted in San Rafael, Bulacan, not in Caloocan City:

MR. WILFREDO C. RIVERA

President, Tryco Pharma Corporation
San Rafael, Bulacan

Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan

 Dear Mr. Rivera:

This is to remind you that your License to Operate as Veterinary Drug and
Product Manufacturer is addressed at San Rafael, Bulacan, and so,
therefore, your production should be done at the above mentioned address
only. Further, production of a drug includes propagation, processing,
compounding, finishing, filling, repacking, labeling, advertising, storage,
distribution or sale of the veterinary drug product. In no instance,
therefore, should any of the above be done at your business office at 117
M. Ponce St., EDSA, Caloocan City.

Please be guided accordingly.

Thank you.

Very truly yours,

(sgd.)
EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division[4]

Accordingly, Tryco issued a Memorandum[5] dated April 7, 1997 which

directed petitioner Aya-ay to report to the companys plant site in Bulacan. When
petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18,
1997.[6] Subsequently, through a Memorandum[7] dated May 9, 1997, Tryco also
directed petitioners Egera, Lario and Barte to report to the companys plant site in
Bulacan.

BMT opposed the transfer of its members to San Rafael, Bulacan, contending
that it constitutes unfair labor practice. In protest, BMT declared a strike on May 26,
1997.

In August 1997, petitioners filed their separate complaints[8] for illegal

dismissal, underpayment of wages, nonpayment of overtime pay and service
incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C.
Rivera. In their Position Paper,[9] petitioners alleged that the company acted in bad
faith during the CBA negotiations because it sent representatives without authority
to bind the company, and this was the reason why the negotiations failed. They added
that the management transferred petitioners Lario, Barte, Egera and Aya-ay
from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the
company to pay them their salaries from May 26 to 31, 1997, service incentive leave,
and overtime pay, and to implement Wage Order No. 4.

In their defense, respondents averred that the petitioners were not dismissed
but they refused to comply with the managements directive for them to report to the
companys plant in San Rafael, Bulacan. They denied the allegation that they
negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President
and Legal Counsel as the companys representatives to the CBA negotiations. They
claim that the failure to arrive at an agreement was due to the stubbornness of the
union panel.

Respondents further averred that, long before the start of the negotiations, the
company had already been planning to decongest the Caloocan office to comply
with the government policy to shift the concentration of manufacturing activities
from the metropolis to the countryside. The decision to transfer the companys
production activities to San Rafael, Bulacan was precipitated by the letter-reminder
of the Bureau of Animal Industry.

On February 27, 1998, the Labor Arbiter dismissed the case for lack of
[10]
merit. The Labor Arbiter held that the transfer of the petitioners would not
paralyze or render the union ineffective for the following reasons: (1) complainants
are not members of the negotiating panel; and (2) the transfer was made pursuant to
the directive of the Department of Agriculture.

The Labor Arbiter also denied the money claims, ratiocinating that the
nonpayment of wages was justified because the petitioners did not render work from
May 26 to 31, 1997; overtime pay is not due because of the compressed workweek
agreement between the union and management; and service incentive leave pay
cannot be claimed by the complainants because they are already enjoying vacation
leave with pay for at least five days. As for the claim of noncompliance with Wage
Order No. 4, the Labor Arbiter held that the issue should be left to the grievance
machinery or voluntary arbitrator.
 On October 29, 1999, the NLRC affirmed the Labor Arbiters Decision,
dismissing the case, thus:

PREMISES CONSIDERED, the Decision of February 27, 1998 is

hereby AFFIRMED and complainants appeal therefrom DISMISSED for
lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino
Egera and Simplicio Aya-ay are directed to report to work at respondents
San Rafael Plant, Bulacan but without backwages. Respondents are
directed to accept the complainants back to work.

SO ORDERED.[11]

On December 22, 1999, the NLRC denied the petitioners motion for
reconsideration for lack of merit.[12]

Left with no recourse, petitioners filed a petition for certiorari with the CA.

On July 24, 2001, the CA dismissed the petition for certiorari and ruled that
the transfer order was a management prerogative not amounting to a constructive
dismissal or an unfair labor practice. The CA further sustained the enforceability of
the MOA, particularly the waiver of overtime pay in light of this Courts rulings
upholding a waiver of benefits in exchange of other valuable privileges. The
dispositive portion of the said CA decision reads:

WHEREFORE, the instant petition is DISMISSED. The Decision

of the Labor Arbiter dated February 27, 1998 and the Decision and
Resolution of the NLRC promulgated on October 29, 1999 and December
22, 1999, respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-
97 and 08-05920-97, are AFFIRMED.

SO ORDERED.[13]

The CA denied the petitioners motion for reconsideration on December 20, 2001.[14]

Dissatisfied, petitioners filed this petition for review raising the following issues:
 -A-

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING

THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER
AND THE COMMISSION THAT THERE WAS NO DISMISSAL,
MUCH LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL
PETITIONERS.

-B-

THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING

AND CONCLUDING THAT PRIVATE RESPONDENTS
COMMITTED ACTS OF UNFAIR LABOR PRACTICE.

-C-

THE COURT OF APPEALS ERRED IN NOT FINDING AND

CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR
MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION
COSTS AND ATTORNEYS FEES.[15]

The petition has no merit.

We have no reason to deviate from the well-entrenched rule that findings of

fact of labor officials, who are deemed to have acquired expertise in matters within
their respective jurisdiction, are generally accorded not only respect but even
finality, and bind us when supported by substantial evidence.[16] This is particularly
true when the findings of the Labor Arbiter, the NLRC and the CA are in absolute
agreement.[17] In this case, the Labor Arbiter, the NLRC, and the CA uniformly
agreed that the petitioners were not constructively dismissed and that the transfer
orders did not amount to an unfair labor practice. But if only to disabuse the minds
of the petitioners who have persistently pursued this case on the mistaken belief that
the labor tribunals and the appellate court committed grievous errors, this Court will
go over the issues raised in this petition.

Petitioners mainly contend that the transfer orders amount to a constructive

dismissal. They maintain that the letter of the Bureau of Animal Industry is not
credible because it is not authenticated; it is only a ploy, solicited by respondents to
give them an excuse to effect a massive transfer of employees. They point out that
the Caloocan City office is still engaged in production activities until now and
respondents even hired new employees to replace them.

We do not agree.

We refuse to accept the petitioners wild and reckless imputation that the
Bureau of Animal Industry conspired with the respondents just to effect the transfer
of the petitioners. There is not an iota of proof to support this outlandish
claim. Absent any evidence, the allegation is not only highly irresponsible but is
grossly unfair to the government agency concerned. Even as this Court has given
litigants and counsel a relatively wide latitude to present arguments in support of
their cause, we will not tolerate outright misrepresentation or baseless
accusation. Let this be fair warning to counsel for the petitioners.

Furthermore, Trycos decision to transfer its production activities to San

Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the
Bureau of Animal Industry, was within the scope of its inherent right to control and
manage its enterprise effectively. While the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.[18]

This prerogative extends to the managements right to regulate, according to

its own discretion and judgment, all aspects of employment, including the freedom
to transferand reassign employees according to the requirements of its
business.[19] Managements prerogative of transferring and reassigning employees
from one area of operation to another in order to meet the requirements of the
business is, therefore, generally not constitutive of constructive dismissal.[20] Thus,
the consequent transfer of Trycos personnel, assigned to the Production Department
was well within the scope of its management prerogative.

When the transfer is not unreasonable, or inconvenient, or prejudicial to the

employee, and it does not involve a demotion in rank or diminution of salaries,
benefits, and other privileges, the employee may not complain that it amounts to a
constructive dismissal.[21] However, the employer has the burden of proving that the
transfer of an employee is for valid and legitimate grounds. The employer must show
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee;
nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits.[22]

Indisputably, in the instant case, the transfer orders do not entail a demotion
in rank or diminution of salaries, benefits and other privileges of the petitioners.
Petitioners, therefore, anchor their objection solely on the ground that it would cause
them great inconvenience since they are all residents of Metro Manila and they
would incur additional expenses to travel daily from Manila to Bulacan.

The Court has previously declared that mere incidental inconvenience is not
sufficient to warrant a claim of constructive dismissal.[23] Objection to a transfer that
is grounded solely upon the personal inconvenience or hardship that will be caused
to the employee by reason of the transfer is not a valid reason to disobey an order of
transfer.[24]

Incidentally, petitioners cite Escobin v. NLRC[25] where the Court held that the
transfer of the employees therein was unreasonable. However, the distance of the
workplace to which the employees were being transferred can hardly compare to that
of the present case. In that case, the employees were being transferred from Basilan
to Manila; hence, the Court noted that the transfer would have entailed the separation
of the employees from their families who were residing in Basilan and accrual of
additional expenses for living accommodations in Manila. In contrast, the distance
from Caloocan to San Rafael, Bulacan is not considerably great so as to compel
petitioners to seek living accommodations in the area and prevent them from
commuting to Metro Manila daily to be with their families.

Petitioners, however, went further and argued that the transfer orders
amounted to unfair labor practice because it would paralyze and render the union
ineffective.

To begin with, we cannot see how the mere transfer of its members can
paralyze the union. The union was not deprived of the membership of the petitioners
whose work assignments were only transferred to another location.
 More importantly, there was no showing or any indication that the transfer
orders were motivated by an intention to interfere with the petitioners right to
organize. Unfair labor practice refers to acts that violate the workers right to
organize. With the exception of Article 248(f) of the Labor Code of the Philippines,
the prohibited acts are related to the workers right to self-organization and to the
observance of a CBA. Without that element, the acts, no matter how unfair, are not
unfair labor practices.[26]

Finally, we do not agree with the petitioners assertion that the MOA is not
enforceable as it is contrary to law. The MOA is enforceable and binding against the
petitioners. Where it is shown that the person making the waiver did so voluntarily,
with full understanding of what he was doing, and the consideration for the quitclaim
is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking.[27]

D.O. No. 21 sanctions the waiver of overtime pay in consideration of the

benefits that the employees will derive from the adoption of a compressed workweek
scheme, thus:

The compressed workweek scheme was originally conceived for

establishments wishing to save on energy costs, promote greater work
efficiency and lower the rate of employee absenteeism, among others.
Workers favor the scheme considering that it would mean savings on the
increasing cost of transportation fares for at least one (1) day a week;
savings on meal and snack expenses; longer weekends, or an additional
52 off-days a year, that can be devoted to rest, leisure, family
responsibilities, studies and other personal matters, and that it will spare
them for at least another day in a week from certain inconveniences that
are the normal incidents of employment, such as commuting to and from
the workplace, travel time spent, exposure to dust and motor vehicle
fumes, dressing up for work, etc. Thus, under this scheme, the generally
observed workweek of six (6) days is shortened to five (5) days but
prolonging the working hours from Monday to Friday without the
employer being obliged for pay overtime premium compensation for work
performed in excess of eight (8) hours on weekdays, in exchange for the
benefits abovecited that will accrue to the employees.
 Moreover, the adoption of a compressed workweek scheme in the company
will help temper any inconvenience that will be caused the petitioners by their
transfer to a farther workplace.

Notably, the MOA complied with the following conditions set by the DOLE,
under D.O. No. 21, to protect the interest of the employees in the implementation of
a compressed workweek scheme:

1. The employees voluntarily agree to work more than eight (8)

hours a day the total in a week of which shall not exceed their
normal weekly hours of work prior to adoption of the compressed
workweek arrangement;

2. There will not be any diminution whatsoever in the weekly or

monthly take-home pay and fringe benefits of the employees;

3. If an employee is permitted or required to work in excess of his

normal weekly hours of work prior to the adoption of the
compressed workweek scheme, all such excess hours shall be
considered overtime work and shall be compensated in accordance
with the provisions of the Labor Code or applicable Collective
Bargaining Agreement (CBA);

4. Appropriate waivers with respect to overtime premium pay for

work performed in excess of eight (8) hours a day may be devised
by the parties to the agreement.

5. The effectivity and implementation of the new working time

arrangement shall be by agreement of the parties.

PESALA v. NLRC,[28] cited by the petitioners, is not applicable to the present

case. In that case, an employment contract provided that the workday consists of 12
hours and the employee will be paid a fixed monthly salary rate that was above the
legal minimum wage. However, unlike the present MOA which specifically states
that the employee waives his right to claim overtime pay for work rendered beyond
eight hours, the employment contract in that case was silent on whether overtime
pay was included in the payment of the fixed monthly salary. This necessitated the
interpretation by the Court as to whether the fixed monthly rate provided under the
employment contract included overtime pay. The Court noted that if the employee
is paid only the minimum wage but with overtime pay, the amount is still greater
than the fixed monthly rate as provided in the employment contract. It, therefore,
held that overtime pay was not included in the agreed fixed monthly rate.

Considering that the MOA clearly states that the employee waives the
payment of overtime pay in exchange of a five-day workweek, there is no room for
interpretation and its terms should be implemented as they are written.

WHEREFORE, the petition is DENIED. The Court of Appeals Decision

dated July 24, 2001 and Resolution dated December 20, 2001 are AFFIRMED.

SO ORDERED.
ABDULJUAHID R. PIGCAULAN,⃰ G.R. No. 173648
Petitioner,

Present:

- versus - CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,
DEL CASTILLO,
ABAD,⃰ ⃰ and
SECURITY and CREDIT VILLARAMA, JR., JJ.
INVESTIGATION, INC. and/or
RENE AMBY REYES , Promulgated:
Respondents. January 16, 2012
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DECISION

DEL CASTILLO, J.:

It is not for an employee to prove non-payment of benefits to which he is entitled by

law. Rather, it is on the employer that the burden of proving payment of these claims rests.
 This Petition for Review on Certiorari[1] assails the February 24, 2006 Decision[2] of
the Court of Appeals (CA) in CA-G.R. SP No. 85515, which granted the petition
for certiorarifiled therewith, set aside the March 23, 2004[3] and June 14,
2004[4] Resolutions of the National Labor Relations Commission (NLRC), and dismissed
the complaint filed by Oliver R. Canoy (Canoy) and petitioner Abduljuahid R. Pigcaulan
(Pigcaulan) against respondent Security and Credit Investigation, Inc. (SCII) and its
General Manager, respondent Rene Amby Reyes.Likewise assailed is the June 28, 2006
Resolution[5] denying Canoys and Pigcaulans Motion for Reconsideration.[6]

Factual Antecedents

Canoy and Pigcaulan were both employed by SCII as security guards and were assigned
to SCIIs different clients. Subsequently, however, Canoy and Pigcaulan filed with the
Labor Arbiter separate complaints[7] for underpayment of salaries and non-payment of
overtime, holiday, rest day, service incentive leave and 13th month pays. These complaints
were later on consolidated as they involved the same causes of action.

Canoy and Pigcaulan, in support of their claim, submitted their respective daily time
records reflecting the number of hours served and their wages for the same. They likewise
presented itemized lists of their claims for the corresponding periods served.

Respondents, however, maintained that Canoy and Pigcaulan were paid their just
salaries and other benefits under the law; that the salaries they received were above the
statutory minimum wage and the rates provided by the Philippine Association of Detective
and Protective Agency Operators (PADPAO) for security guards; that their holiday pay
were already included in the computation of their monthly salaries; that they were paid
additional premium of 30% in addition to their basic salary whenever they were required
to work on Sundays and 200% of their salary for work done on holidays; and, that Canoy
and Pigcaulan were paid the corresponding 13th month pay for the years 1998 and 1999. In
support thereof, copies of payroll listings[8] and lists of employees who received their
13th month pay for the periods December 1997 to November 1998 and December 1998 to
November 1999[9] were presented. In addition, respondents contended that Canoys and
Pigcaulans monetary claims should only be limited to the past three years of employment
pursuant to the rule on prescription of claims.

Ruling of the Labor Arbiter

Giving credence to the itemized computations and representative daily time records
submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their
monetary claims in his Decision[10] dated June 6, 2002. The Labor Arbiter held that the
payroll listings presented by the respondents did not prove that Canoy and Pigcaulan were
duly paid as same were not signed by the latter or by any SCII officer. The 13th month
payroll was, however, acknowledged as sufficient proof of payment, for it bears Canoys
and Pigcaulans signatures. Thus, without indicating any detailed computation of the
judgment award, the Labor Arbiter ordered the payment of overtime pay, holiday pay,
service incentive leave pay and proportionate 13thmonth pay for the year 2000 in favor of
Canoy and Pigcaulan, viz:

WHEREFORE, the respondents are hereby ordered to pay the

complainants: 1) their salary differentials in the amount of P166,849.60 for
Oliver Canoy and P121,765.44 for Abduljuahid Pigcaulan; 2) the sum
of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service incentive leave
pay and; [3]) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan as
proportionate 13th month pay for the year 2000. The rest of the claims are
dismissed for lack of sufficient basis to make an award.

SO ORDERED.[11]

Ruling of the National Labor Relations Commission

Respondents appealed to the NLRC. They alleged that there was no basis
for the awards made because aside from the self-serving itemized computations, no
representative daily time record was presented by Canoy and Pigcaulan. On the contrary,
respondents asserted that the payroll listings they submitted should have been given more
probative value. To strengthen their cause, they attached to their Memorandum on Appeal
payrolls[12] bearing the individual signatures of Canoy and Pigcaulan to show that the latter
have received their salaries, as well as copies of transmittal letters[13] to the bank to show
that the salaries reflected in the payrolls were directly deposited to the ATM accounts of
SCIIs employees.
 The NLRC, however, in a Resolution[14] dated March 23, 2004, dismissed the
appeal and held that the evidence show underpayment of salaries as well as non-payment
of service incentive leave benefit. Accordingly, the Labor Arbiters Decision was
sustained. The motion for reconsideration thereto was likewise dismissed by the NLRC in
a Resolution[15] dated June 14, 2004.

Ruling of the Court of Appeals

In respondents petition for certiorari with prayer for the issuance of a temporary
restraining order and preliminary injunction[16] before the CA, they attributed grave abuse
of discretion on the part of the NLRC in finding that Canoy and Pigcaulan are entitled to
salary differentials, service incentive leave pay and proportionate 13th month pay and in
arriving at amounts without providing sufficient bases therefor.

The CA, in its Decision[17] dated February 24, 2006, set aside the rulings of
both the Labor Arbiter and the NLRC after noting that there were no factual and legal bases
mentioned in the questioned rulings to support the conclusions made. Consequently, it
dismissed all the monetary claims of Canoy and Pigcaulan on the following rationale:

First. The Labor Arbiter disregarded the NLRC rule that, in cases involving
money awards and at all events, as far as practicable, the decision shall embody
the detailed and full amount awarded.

Second. The Labor Arbiter found that the payrolls submitted by SCII have no
probative value for being unsigned by Canoy, when, in fact, said payrolls,
particularly the payrolls from 1998 to 1999 indicate the individual signatures of
Canoy.

Third. The Labor Arbiter did not state in his decision the substance of the
evidence adduced by Pigcaulan and Canoy as well as the laws or jurisprudence
that would show that the two are indeed entitled to the salary differential and
incentive leave pays.

Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment
of the claimed salaries and benefits despite the absence of proof that Reyes
deliberately or maliciously designed to evade SCIIs alleged financial obligation;
hence the Labor Arbiter ignored that SCII has a corporate personality separate
and distinct from Reyes. To justify solidary liability, there must be an allegation
 and showing that the officers of the corporation deliberately or maliciously
designed to evade the financial obligation of the corporation.[18]

Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA
in a Resolution[19] dated June 28, 2006.

Hence, the present Petition for Review on Certiorari.

Issues

The petition ascribes upon the CA the following errors:

I. The Honorable Court of Appeals erred when it dismissed the

complaint on mere alleged failure of the Labor Arbiter and the NLRC to observe
the prescribed form of decision, instead of remanding the case for reformation
of the decision to include the desired detailed computation.

II. The Honorable Court of Appeals erred when it [made] complainants

suffer the consequences of the alleged non-observance by the Labor Arbiter and
NLRC of the prescribed forms of decisions considering that they have complied
with all needful acts required to support their claims.

III. The Honorable Court of Appeals erred when it dismissed the

complaint allegedly due to absence of legal and factual [bases] despite
attendance of substantial evidence in the records.[20]

It is well to note that while the caption of the petition reflects both the names of
Canoy and Pigcaulan as petitioners, it appears from its body that it is being filed solely by
Pigcaulan. In fact, the Verification and Certification of Non-Forum Shopping was
executed by Pigcaulan alone.

In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not
strictly bound by the rules. And even so, the rules do not mandate that a detailed
computation of how the amount awarded was arrived at should be embodied in the
decision. Instead, a statement of the nature or a description of the amount awarded and the
specific figure of the same will suffice. Besides, his and Canoys claims were supported by
substantial evidence in the form of the handwritten detailed computations which the Labor
Arbiter termed as representative daily time records, showing that they were not properly
compensated for work rendered. Thus, the CA should have remanded the case instead of
outrightly dismissing it.

In their Comment,[21] respondents point out that since it was only Pigcaulan who
filed the petition, the CA Decision has already become final and binding upon Canoy. As
to Pigcaulans arguments, respondents submit that they were able to present sufficient
evidence to prove payment of just salaries and benefits, which bits of evidence were
unfortunately ignored by the Labor Arbiter and the NLRC. Fittingly, the CA reconsidered
these pieces of evidence and properly appreciated them. Hence, it was correct in dismissing
the claims for failure of Canoy and Pigcaulan to discharge their burden to disprove
payment.

Pigcaulan, this time joined by Canoy, asserts in his Reply[22] that his filing of the
present petition redounds likewise to Canoys benefit since their complaints were
consolidated below.As such, they maintain that any kind of disposition made in favor or
against either of them would inevitably apply to the other. Hence, the institution of the
petition solely by Pigcaulan does not render the assailed Decision final as to
Canoy. Nonetheless, in said reply they appended Canoys affidavit[23] where he verified
under oath the contents and allegations of the petition filed by Pigcaulan and also attested
to the authenticity of its annexes. Canoy, however, failed to certify that he had not filed any
action or claim in another court or tribunal involving the same issues. He likewise explains
in said affidavit that his absence during the preparation and filing of the petition was caused
by severe financial distress and his failure to inform anyone of his whereabouts.

Our Ruling

The assailed CA Decision is considered final as

to Canoy.

We have examined the petition and find that same was filed by Pigcaulan solely on his
own behalf. This is very clear from the petitions prefatory which is phrased as follows:
 COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel,
unto this Honorable Court x x x. (Emphasis supplied.)

Also, under the heading Parties, only Pigcaulan is mentioned as petitioner and consistent
with this, the body of the petition refers only to a petitioner and never in its plural form
petitioners. Aside from the fact that the Verification and Certification of Non-Forum
Shopping attached to the petition was executed by Pigcaulan alone, it was plainly and
particularly indicated under the name of the lawyer who prepared the same, Atty. Josefel
P. Grageda, that he is the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view of
these, there is therefore, no doubt, that the petition was brought only on behalf of
Pigcaulan. Since no appeal from the CA Decision was brought by Canoy, same has already
become final and executory as to him.

Canoy cannot now simply incorporate in his affidavit a verification of the contents and
allegations of the petition as he is not one of the petitioners therein. Suffice it to state that it
would have been different had the said petition been filed in behalf of both Canoy and
Pigcaulan. In such a case, subsequent submission of a verification may be allowed as non-
compliance therewith or a defect therein does not necessarily render the pleading, or the
petition as in this case, fatally defective.[24] The court may order its submission or
correction, or act on the pleading if the attending circumstances are such that strict
compliance with the Rule may be dispensed with in order that the ends of justice may be
served thereby. Further, a verification is deemed substantially complied with when one
who has ample knowledge to swear to the truth of the allegations in the complaint or
petition signs the verification, and when matters alleged in the petition have been made in
good faith or are true and correct.[25] However, even if it were so, we note that Canoy still
failed to submit or at least incorporate in his affidavit a certificate of non-forum shopping.

The filing of a certificate of non-forum shopping is mandatory so much so

that non-compliance could only be tolerated by special circumstances and compelling
reasons.[26] This Court has held that when there are several petitioners, all of them must
execute and sign the certification against forum shopping; otherwise, those who did not
sign will be dropped as parties to the case.[27] True, we held that in some cases, execution
by only one of the petitioners on behalf of the other petitioners constitutes substantial
compliance with the rule on the filing of a certificate of non-forum shopping on the ground
of common interest or common cause of action or defense.[28] We, however, find that
common interest is not present in the instant petition. To recall, Canoys and Pigcaulans
complaints were consolidated because they both sought the same reliefs against the same
respondents. This does not, however, mean that they share a common interest or
defense. The evidence required to substantiate their claims may not be the same. A
particular evidence which could sustain Canoys action may not effectively serve as
sufficient to support Pigcaulans claim.

Besides, assuming that the petition is also filed on his behalf, Canoy failed to show
any reasonable cause for his failure to join Pigcaulan to personally sign the Certification of
Non-Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims
against SCII, especially so, if he was indeed suffering from financial distress. However,
Canoy failed to advance any justifiable reason why he did not inform anyone of his
whereabouts when he knows that he has a pending case against his former
employer. Sadly, his lack of prudence and diligence cannot merit the courts consideration
or sympathy. It must be emphasized at this point that procedural rules should not be ignored
simply because their non-observance may result in prejudice to a partys substantial
rights. The Rules of Court should be followed except only for the most persuasive of
reasons.[29]
Having declared the present petition as solely filed by Pigcaulan, this Court shall
consider the subsequent pleadings, although apparently filed under his and Canoys name,
as solely filed by the former.

There was no substantial evidence to support the

grant of overtime pay.

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive
leave pay and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor
Arbiter relied heavily on the itemized computations they submitted which he considered
as representative daily time records to substantiate the award of salary differentials. The
NLRC then sustained the award on the ground that there was substantial evidence of
underpayment of salaries and benefits.

We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten
itemized computations are self-serving, unreliable and unsubstantial evidence to sustain
the grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated
as they are, there is no way of verifying the truth of the handwritten entries stated
therein. Written only in pieces of paper and solely prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by the Labor Arbiter, can hardly be considered
as competent evidence to be used as basis to prove that the two were underpaid of their
salaries. We find nothing in the records which could substantially support Pigcaulans
contention that he had rendered service beyond eight hours to entitle him to overtime pay
and during Sundays to entitle him to restday pay. Hence, in the absence of any concrete
proof that additional service beyond the normal working hours and days had indeed been
rendered, we cannot affirm the grant of overtime pay to Pigcaulan.

Pigcaulan is entitled to holiday pay, service

incentive leave pay and proportionate
13th month pay for year 2000.

However, with respect to the award for holiday pay, service incentive leave
pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:

ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid
his regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;

xxxx

While Article 95 of the Labor Code provides:

ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every

employee who has rendered at least one year of service shall be entitled to a
yearly service incentive of five days with pay.

xxxx

Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if
he does not work.[30] Likewise, express provision of the law entitles him to service
incentive leave benefit for he rendered service for more than a year already. Furthermore,
under Presidential Decree No. 851,[31] he should be paid his 13th month pay. As employer,
SCII has the burden of proving that it has paid these benefits to its employees.[32]

SCII presented payroll listings and transmittal letters to the bank to show that Canoy
and Pigcaulan received their salaries as well as benefits which it claimed are already
integrated in the employees monthly salaries. However, the documents presented do not
prove SCIIs allegation. SCII failed to show any other concrete proof by means of records,
pertinent files or similar documents reflecting that the specific claims have been paid. With
respect to 13th month pay, SCII presented proof that this benefit was paid but only for the
years 1998 and 1999. To repeat, the burden of proving payment of these monetary claims
rests on SCII, being the employer. It is a rule that one who pleads payment has the burden
of proving it. Even when the plaintiff alleges non-payment, still the general rule is that the
burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-
payment.[33] Since SCII failed to provide convincing proof that it has already settled the
claims, Pigcaulan should be paid his holiday pay, service incentive leave benefits and
proportionate 13th month pay for the year 2000.

The CA erred in dismissing the claims instead of

remanding the case to the Labor Arbiter for a
detailed computation of the judgment award.

Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary
awards granted. Such failure, however, should not result in prejudice to the substantial
rights of the party. While we disallow the grant of overtime pay and restday pay in favor
of Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service
incentive leave pay and 13th month pay for year 2000. Hence, the CA is not correct in
dismissing Pigcaulans claims in its entirety.

Consistent with the rule that all money claims arising from an employer-employee
relationship shall be filed within three years from the time the cause of action
accrued,[34] Pigcaulan can only demand the amounts due him for the period within three
years preceding the filing of the complaint in 2000. Furthermore, since the records are
insufficient to use as bases to properly compute Pigcaulans claims, the case should be
remanded to the Labor Arbiter for a detailed computation of the monetary benefits due to
him.

WHEREFORE, the petition is GRANTED. The Decision dated

February 24, 2006 and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R.
SP No. 85515 are REVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is
hereby declared ENTITLED to holiday pay and service incentive leave pay for the years
1997-2000 and proportionate 13th month pay for the year 2000.

The case is REMANDED to the Labor Arbiter for further proceedings to determine the
exact amount and to make a detailed computation of the monetary benefits due
Abduljuahid R. Pigcaulan which Security and Credit Investigation Inc. should pay without
delay.

G.R. No. 182848 October 5, 2011

EMIRATE SECURITY AND MAINTENANCE SYSTEMS, INC. and ROBERTO A. YAN, Petitioners,
vs.
GLENDA M. MENESE, Respondent.

DECISION

BRION, J.:

Before the Court is the petition for review on certiorari1 which assails the decision2 and the
resolution3 of the Court of Appeals (CA) rendered on February 28, 2008 and May 14, 2008,
respectively, in CA-G.R. SP. No. 100073.4

The Antecedents

The facts of the case are summarized below.

On June 5, 2001, respondent Glenda M. Menese (Menese) filed a complaint for constructive
dismissal; illegal reduction of salaries and allowances; separation pay; refund of contribution to cash
bond; overtime, holiday, rest day and premium pay; damages; and attorney’s fees against the
petitioners, Emirate Security and Maintenance Systems, Inc. (agency) and its General Manager,
Robert A. Yan (Yan).

Menese alleged in the compulsory arbitration proceedings that on April 1, 1999, the agency engaged
her services as payroll and billing clerk. She was assigned to the agency’s security detachment at
the Philippine General Hospital (PGH). She was given a monthly salary of ₱9,200.00 and an
allowance of ₱2,500.00, for a total of ₱11,700.00 in compensation. Effective May 2001, her
allowance was allegedly reduced to ₱1,500.00 without notice, and ₱100.00 was deducted from her
salary every month as her contribution to a cash bond which lasted throughout her employment. She
was required to work seven (7) days a week, from 8:00 a.m. to 5:00 p.m. She was also required to
report for work on holidays, except on New Year’s Day and Christmas. She claimed that she was
never given overtime, holiday, rest day and premium pay.

Menese further alleged that on May 4, 2001, she started getting pressures from the agency for her to
resign from her position because it had been committed to a certain Amy Claro, a protégée of Mrs.
Violeta G. Dapula (Dapula) the new chief of the Security Division of the University of the Philippines
(UP) Manila and PGH. Menese raised the matter with Yan who told her that the agency was in the
process of establishing goodwill with Dapula, so it had to sacrifice her position to accommodate
Dapula’s request to hire Claro.

Menese claimed that she was told not to worry because if she was still interested in working with the
agency, she could still be retained as a lady guard with a salary equivalent to the minimum wage.
She would then be detailed to another detachment because Dapula did not like to see her around
anymore. If the offer was acceptable to her, she should report to the agency’s personnel officer for
the issuance of the necessary duty detail order. Menese thought about the offer and soon realized
that she was actually being demoted in rank and salary. She eventually decided to decline the offer.
She continued reporting to the PGH detachment and performed her usual functions as if nothing
happened.

Menese alleged that at this juncture, Claro reported at the agency’s PGH detachment and performed
the functions she was doing. She bewailed that thereafter she continuously received harassment
calls and letters. She was also publicly humiliated and badly treated at the detachment. The agency,
through Security Officer Alton Acab, prohibited her from using the office computer. On May 18, 2001,
Jose Dante Chan, the agency’s PGH detachment commander, arrogantly told her to leave PGH.
Again on May 25, 2001, Chan shouted at her and told her to pack her things and to leave
immediately, and not to return to the detachment anymore; otherwise, she would be physically
driven out of the office.

Still not satisfied with what they did, the petitioners allegedly withheld her salary for May 16-31,
2001. She claimed that the petitioners dismissed her from the service without just cause and due
process.

The petitioners, for their part, denied liability. They alleged that on May 8, 2001, Dapula informed the
agency in writing,5 through Yan, that she had been receiving numerous complaints from security
guards and other agency employees about Menese’s unprofessional conduct. She told the
petitioners that she was not tolerating Menese’s negative work attitude despite the fact that she is
the wife of Special Police Major Divino Menese who is a member of the UP Manila police force, and
that as a matter of policy and out of delicadeza, she does not condone nepotism in her division.

On the basis of Dapula’s letter, Yan sent Menese a memorandum dated May 16, 2001,6 instructing
her to report to the agency’s head office and, there and then, discussed with her Dapula’s letter. Yan
informed Menese that upon Dapula’s request, she would be transferred to another assignment which
would not involve any demotion in rank or diminution in her salary and other benefits. Although
Menese said that she would think about the matter, the petitioners were surprised to receive
summons from the labor arbiter regarding the complaint.

The Compulsory Arbitration Rulings

In a decision dated March 14, 2002,7 Labor Arbiter Jovencio LL. Mayor, Jr. declared Menese to have
been constructively dismissed. He found the petitioners wanting in good faith in transferring Menese
to another detachment as she would be suffering a demotion in rank and a diminution in pay.
Accordingly, he ordered the petitioners to immediately reinstate Menese and, solidarily, to pay her
full backwages of ₱83,443.75 (latest computation); ₱66,924.00 in monetary benefits; ₱50,000.00
and ₱20,000.00 in moral and exemplary damages, respectively; and attorney’s fees of ₱15,036.74.

The petitioners appealed to the National Labor Relations Commission (NLRC). On September 30,
2003, the NLRC Second Division issued a resolution8 granting the appeal and reversing the labor
arbiter’s decision. It ruled that Menese was not constructively dismissed but was merely transferred
to another detachment. It opined that the transfer was a valid exercise of the petitioners’
management prerogative. However, it ruled that despite Menese’s refusal to accept the transfer, she
cannot be made liable for abandonment as her refusal was based on her honest belief that she was
being constructively dismissed. The NLRC ordered Menese, at her option, to immediately report to
the agency’s head office and the agency to accept her back to work. It absolved Yan from liability,
and deleted the award of backwages, overtime pay and damages.

On October 28, 2003, Menese filed a partial motion for reconsideration9 of the NLRC resolution and
later (on June 17, 2005), a motion to recall the entry of judgment of October 31, 2003. On June 1,
2007, the NLRC rendered a resolution10 setting aside the entry of judgment and denying Menese’s
partial motion for reconsideration.

The Petition for Certiorari

Menese elevated her case to the CA through a petition for certiorari11 under Rule 65 of the Rules of
Court. In the main, she argued that the agency was in bad faith when it issued the memoranda dated
May 16, 2001,12 May 22, 200113 and May 28, 2001,14 ordering her transfer from the PGH detachment
to the agency’s head office. She posited that it was a ploy to create a vacancy in the detachment to
accommodate the entry of Claro, Dapula’s protégée. She regarded the transfer as a removal from
her position at PGH — a constructive dismissal.

The agency, in rebuttal, posited that Menese was not illegally dismissed, but was merely transferred
to its head office in response to the request of the new head of the UP-PGH security division for the
transfer. The action, it maintained, was a valid exercise of its management prerogative. Thus,
Menese was guilty of abandoning her employment when she refused to report for work at her new
posting.

The CA Decision

The CA granted the petition in its decision of February 28, 2008.15 It set aside the assailed
resolutions of the NLRC and reinstated the March 14, 2002 decision of the labor arbiter.

As the labor arbiter did, the CA found Menese to have been constructively, and therefore illegally,
dismissed. It noted that the memoranda16 on Menese’s transfer were prompted by Dacula’s letter,
dated May 8, 2001,17 to Yan, which contained allegations on Menese’s supposed unprofessional
conduct and involvement in nepotism. It further noted that when Yan asked Dapula in writing18 to
provide the agency with documents/evidence that would support her allegations, she failed to do so.
The CA thus concluded that the reasons for Menese’s transfer did not exist or that no substantial
evidence was presented in that regard.

The CA brushed aside the petitioners’ argument that it was their prerogative to transfer Menese from
the agency’s PGH detachment to its head office at Ortigas Avenue, Mandaluyong City. Relying on
applicable jurisprudence, the appellate court pointed out that while it is the management’s
prerogative to transfer an employee from one office to another within the business establishment, it
is not without limitation. It must be exercised in such a way that there is no demotion in rank or
diminution in pay, benefits and other privileges. Otherwise, the transfer amounts to a constructive
dismissal, as correctly pointed out by the labor arbiter in his decision of March 14, 2002.19 In this
light, the CA held that the petitioners failed to prove that Menese abandoned her employment.

The CA sustained all the other findings of the labor arbiter. On the whole, it ruled that the NLRC
misappreciated the evidence in the case. The petitioners moved for reconsideration, but the CA
denied the motion in its resolution of May 14, 2008.20

The Petitioners’ Case

Aside from the petition itself,21 the petitioners filed a reply to Menese’s comment22 and a
memorandum23 where they asked for a reversal of the assailed CA rulings on the ground that the CA
gravely erred in:

(1) Affirming the labor arbiter’s findings that Menese was constructively dismissed;

(2) Holding Yan solidarily liable with the agency for damages; and

(3) Sustaining the award of backwages, damages and attorney’s fees, as well as overtime
pay.

The petitioners insist that Menese was not illegally dismissed. They argue that it was Menese who
deliberately and unjustifiably refused to work despite several notices24 to her after she was validly
relieved from her current work assignment due to a client’s request. They maintain that since
Menese chose not to return to work, she must be considered either to have resigned from or to have
abandoned her employment. They further maintain that nothing on record shows any positive or
overt act of the agency in dismissing Menese.

Moreover, the petitioners regard Menese’s continued refusal to report to the agency’s head office as
an act of gross insubordination constituting a just cause for termination under Article 282(a) of the
Labor Code. They argue that under this law, an employer may terminate an employment for serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or his
representative in connection with his work.

The petitioners posit that she is not entitled to reinstatement and backwages since she failed to
comply with the reinstatement option stated in the NLRC resolution. Neither is she entitled to
overtime pay because she did not work beyond the eight (8)-hour working period; her one (1) hour
time off from twelve noon to 1:00 p.m. is not compensable. Neither is Menese entitled to moral and
exemplary damages because the evidence on record does not show any malice or bad faith on their
part to justify the award.

The petitioners likewise take exception to the award of attorney’s fees as the labor arbiter’s decision
and the NLRC’s resolution failed to state the justification for the award. They further contend that the
CA gravely erred in upholding the labor arbiter’s ruling that Yan is solidarily liable with the agency, as
Yan was merely acting in his capacity as the agency’s general manager, and that there is no
showing that Yan acted maliciously or in bad faith when he ordered Menese’s transfer. They also
point out that Menese did not challenge before the CA the NLRC ruling absolving Yan from any
liability.

The Case for Menese

By way of her comment25 and memorandum,26 Menese asks that the appeal be denied for lack of
merit.

She claims that at the arbitration stage, the petitioners readily admitted the fact of her removal,
manifesting in open session their lack of interest to settle the case amicably as they have a strong
evidence to support their defense of her dismissal for cause. She observed during the hearing that
the petitioners were very confident about their case, because according to them, they had Dapula’s
letter asking for her immediate removal.27

Menese further claims that the petitioners realized that they did not have the necessary evidence, so
Yan wrote Dapula a letter asking her for proof of the complaints or grievances of the security guards
against Menese.28 Dapula did not produce or present the evidence they asked for resulting in their
failure to substantiate their defense of dismissal for cause. Menese contends that the petitioners
then revised their theory of the case and made it appear that she was not actually dismissed but was
merely transferred, purportedly in the exercise of their management prerogative.

She posits that her transfer was motivated by ill will and bad faith, as it was done to facilitate the
entry of a favored applicant to the PGH detachment. She intimates that the labor arbiter resolved the
case correctly when he found her to have been constructively or illegally dismissed. She bewails the
NLRC’s surprising reversal of the labor arbiter’s decision, but feels vindicated when the CA set aside
the NLRC ruling.

Menese submits that the CA is correct in nullifying the NLRC’s reversal of her illegal dismissal case
because the labor tribunal closed its eyes to the fact that bad faith attended her transfer. She points
out that the petitioners’ twin directives, vis-à-vis her transfer upon which the NLRC based its ruling,
"were both issued for a selfish and immoral purpose;"29 the first, dated May 16, 2001,30 was issued
for the purpose of creating a vacancy, and the second, dated May 22, 2001,31 was intended to cover
up the wrongdoing that was earlier committed. In other words, the directives were tainted with malice
and ill will. On the matter of Yan’s liability, Menese maintains that the NLRC committed a serious
error in allowing him to get away with his wrongdoing considering the injustice done to her as a
result of her unceremonious dismissal.

In a different vein, Menese assails the NLRC’s exclusion of the one-hour meal break as overtime
work, for it erroneously assumed that her employer had been giving its employees a 60 minute time-
off for regular meals and that she was not performing work during the period. She argues that this
was not the actual practice in the workplace, contending that she continued working even during the
one-hour meal break.

Finally, Menese maintains that the CA correctly reinstated the labor arbiter’s award of attorney’s fees
and the imposition of solidary liability on Yan and the agency. She posits that in her quest for justice
because of her unceremonious dismissal, she was constrained to engage the services of a counsel
to handle her case.

The Court’s Ruling

We deny the petition for lack of merit. The evidence of Menese’s unwarranted, unjustified and, in her
own language, "unceremonious" dismissal is so glaring that to ignore it is to commit, as the NLRC
did, grave abuse of discretion.

We note as a starting point that at the time material to the case, Menese ceased to be the agency’s
payroll and billing clerk at its PGH detachment. The position was taken away from her as she had
been transferred to the agency’s main office on Ortigas Avenue, Mandaluyong City, upon the
request of Dapula, the new chief of the UP-PGH Security Division. The transfer was to be carried out
through a memorandum dated May 16, 200132 issued by Yan; a second memorandum dated May
22, 200133 issued by Personnel Officer Edwin J. Yabes, reminding Menese of Yan’s instruction for
her to report to the main office; and a third memorandum dated May 28, 2001,34 also issued by
Yabes informing Menese that it was her second notice to assume her work detail at the main office.
Yabes instructed her to report for work on May 30, 2001.

Citing Mendoza v. Rural Bank of Lucban,35 the petitioners argue that the transfer was undertaken in
the exercise of management prerogative in the pursuit of their legitimate interests. They submit that
Menese refused to comply with the valid transfer orders they issued, making her liable for
abandonment and insubordination. They argue that nothing on record shows that she was illegally
dismissed as no dismissal had been imposed on her.

On a superficial consideration, the petitioners’ position looks unassailable as indeed an employer

can regulate, generally without restraint and according to its own discretion and judgment, every
aspect of its business, including work assignments and transfer of employees, subject only to
limitations imposed by law.36 This submission, however, glossed over or suppressed a crucial factor
in the present labor controversy. We refer to Dapula’s letter to Yan in early May 2001,37 asking for
Menese’s transfer allegedly due to numerous complaints from security guards and co-workers
regarding her unprofessionalism and because of nepotism; Menese is the wife of a member of the
UP Manila police force.

Had Yan inquired into Dapula’s claim of Menese’s alleged unprofessionalism, ideally through an
administrative investigation, he could have been provided with a genuine reason — assuming proof
of Dapula’s accusation existed — for Menese’s transfer or even for her dismissal, if warranted. That
the agency did not get into the bottom of Dapula’s letter before it implemented Menese’s transfer is
indicative of the sheer absence of an objective justification for the transfer. The most that the agency
did was to write Dapula a letter, through Yan, asking her to provide documents/evidence in support
of her request for Menese’s transfer.38 Significantly, Yan’s request came after the labor arbiter’s
summons to Yan regarding Menese’s complaint. Dapula never responded to Yan’s letter and neither
did she provide the evidence needed for the agency’s defense in the complaint.

As Menese noted, the petitioners did not submit as annex to the petition Yan’s letter to Dapula, and
the reason appears to be obvious — they were trying to avoid calling attention to the absence of
proof of Menese’s alleged unprofessionalism and her involvement in nepotism. Evidently, the basis
for Dapula’s request did not exist. We thus find credible Menese’s contention that her transfer was a
ploy to remove her from the PGH detachment to accommodate the entry of Dapula’s protégée. In
short, the agency wanted to create a vacancy for Claro, the protégée. Confronted with this clear
intent of the petitioners, we cannot see how Menese’s transfer could be considered a valid exercise
of management prerogative. As Menese rightly put it, her transfer was arbitrarily done, motivated no
less by ill will and bad faith.

In Blue Dairy Corporation v. NLRC,39 the Court stressed as a matter of principle that the managerial
prerogative to transfer personnel must be exercised without abuse of discretion, bearing in mind the
basic elements of justice and fair play. Having the right should not be confused with the manner in
which that right is exercised. Thus, it should not be used as a subterfuge by the employer to get rid
of "an undesirable worker." Measured against this basic precept, the petitioners undoubtedly abused
their discretion or authority in transferring Menese to the agency’s head office. She had become
"undesirable" because she stood in the way of Claro’s entry into the PGH detachment. Menese had
to go, thus the need for a pretext to get rid of her. The request of a client for the transfer became the
overriding command that prevailed over the lack of basis for the transfer.
We cannot blame Menese for refusing Yan’s offer to be transferred. Not only was the transfer
1avvphi1

arbitrary and done in bad faith, it would also result, as Menese feared, in a demotion in rank and a
diminution in pay. Although Yan informed Menese that "based on the request of the client, she will
be transferred to another assignment which however will not involve any demotion in rank nor
diminution in her salaries and other benefits,"40 the offer was such as to invite reluctance and
suspicion as it was couched in a very general manner. We find credible Menese’s submission on this
point, i.e., that under the offered transfer: (1) she would hold the position of lady guard and (2) she
would be paid in accordance with the statutory minimum wage, or from ₱11,720.00 to ₱7,500.00.

In these lights, Menese’s transfer constituted a constructive dismissal as it had no justifiable basis
and entailed a demotion in rank and a diminution in pay for her. For a transfer not to be considered a
constructive dismissal, the employer must be able to show that the transfer is for a valid reason,
entails no diminution in the terms and conditions of employment, and must be unreasonably
inconvenient or prejudicial to the employee. If the employer fails to meet these standards, the
employee’s transfer shall amount, at the very least, to constructive dismissal.41The petitioners,
unfortunately for them, failed to come up to these standards.

In declaring Menese’s transfer to be in the valid exercise of the petitioners’ management prerogative,
the NLRC grossly misappreciated the evidence and, therefore, gravely abused its discretion in
closing its eyes to the patent injustice committed on Menese. It completely disregarded the obvious
presence of bad faith in Menese’s transfer. Labor justice demands that Menese be awarded moral
and exemplary damages42 and, for having been constrained to litigate in order to protect her rights,
attorney’s fees.43

Yan’s solidary liability

Yan had been aware all the time of the utter lack of a valid reason for Menese’s transfer. He had
been aware all the time that Dapula’s charges against Menese — the ostensible reason for the
transfer — were nonexistent as Dapula failed to substantiate the charges. He was very much a part
of the flagrant and duplicitous move to get rid of Menese to give way to Claro, Dapula’s protégée.

Based on the facts, Yan is as guilty as the agency in causing the transfer that was undertaken in bad
faith and in a wanton and oppressive manner. Thus, he should be solidarily liable with the agency for
Menese’s monetary awards.

The overtime pay award

While the labor arbiter declared that Menese’s claim for overtime pay is unrebutted44 and, indeed,
nowhere in the petitioners’ position paper did they controvert Menese’s claim, we hold that the claim
must still be substantiated. In Global Incorporated v. Commissioner Atienza,45 a claim for overtime
pay will not be granted for want of factual and legal basis. In this respect, the records indicate that
the labor arbiter granted Menese’s claim for holiday pay, rest day and premium pay on the basis of
payrolls.46 There is no such proof in support of Menese’s claim for overtime pay other than her
contention that she worked from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show that
she was working during the entire one hour meal break. We thus find the NLRC’s deletion of the
overtime pay award in order.

Also, the NLRC noted that the award of ₱2,600.00 for the refund of the cash bond deposit is
overstated and should be adjusted to ₱600.00 only, as indicated by the payrolls. We likewise find the
adjustment in order.
All told, except for the above clarifications on the overtime pay award and the refund of the cash
bond deposit, we reiterate and so declare the petition to be devoid of merit.

WHEREFORE, premises considered, except for the overtime pay award and the refund of deposit
for the cash bond, the petition is DENIED for lack of merit. The assailed decision and resolution of
the Court of Appeals are AFFIRMED, with the following modifications:

1) The deletion of the overtime pay award; and

2) Adjustment of the refund of the cash or surety bond deposit award from ₱2,500.00 to
₱600.00.

Costs against the petitioners.

SO ORDERED.

.R. No. 189404 December 11, 2013

WILGEN LOON, JERRY ARCILLA, ALBERTPEREYE, ARNOLD PEREYE, EDGARDO OBOSE,

ARNEL MALARAS, PATROCINO TOETIN, EVELYN LEONARDO, ELMER GLOCENDA, RUFO
CUNAMAY, ROLANDOSAJOL, ROLANDO ABUCAYON, JENNIFER NATIVIDAD, MARITESS
TORION, ARMANDO LONZAGA, RIZAL GELLIDO, EVIRDE HAQUE,1 MYRNA VINAS,
RODELITO AYALA, WINELITO OJEL, RENATO RODREGO, NENA ABINA, EMALYN
OLIVEROS, LOUIE ILAGAN, JOEL ENTIG, ARNEL ARANETA, BENJAMIN COSE, WELITO
LOON and WILLIAM ALIPAO, Petitioners,
vs.
POWER MASTER, INC., TRI-C GENERAL SERVICES, and SPOUSES HOMER and CARINA
ALUMISIN,Respondents.

DECISION

BRION, J.:

We resolve the petition for review on certiorari,2 filed by petitioners Wilgen Loon, Jerry Arcilla, Albert
Pereye, Arnold Pereye, Edgardo Obose, Arnel Malaras, Patrocino Toetin, Evelyn Leonardo, Elmer
Glocenda, Rufo Cunamay, Rolando Sajol, Rolando Abucayon, Jennifer Natividad, Maritess Torion,
Armando Lonzaga, Rizal Gellido, Evirde Haque, Myrna Vinas, Rodelito Ayala, Winelito Ojel, Renato
Rodrego, Nena Abina, Emalyn Oliveros, Louie Ilagan, Joel Entig, Arnel Araneta, Benjamin Cose,
Welito Loon, William Alipao (collectively, the petitioners), to challenge the June 5, 2009 decision3 and
the August 28, 2009 resolution4 of the Court of Appeals (CA) in CA-G.R. SP No. 95182.

The Factual Antecedents

Respondents Power Master, Inc. and Tri-C General Services employed and assigned the petitioners
as janitors and leadsmen in various Philippine Long Distance Telephone Company (PLDT) offices in
Metro Manila area. Subsequently, the petitioners filed a complaint for money claims against Power
Master, Inc., Tri-C General Services and their officers, the spouses Homer and Carina Alumisin
(collectively, the respondents). The petitioners alleged in their complaint that they were not paid
minimum wages, overtime, holiday, premium, service incentive leave, and thirteenth month pays.
They further averred that the respondents made them sign blank payroll sheets. On June 11, 2001,
the petitioners amended their complaint and included illegal dismissal as their cause of action. They
claimed that the respondents relieved them from service in retaliation for the filing of their original
complaint.

Notably, the respondents did not participate in the proceedings before the Labor Arbiter except on
April 19, 2001 and May 21, 2001 when Mr. Romulo Pacia, Jr. appeared on the respondents’
behalf.5 The respondents’ counsel also appeared in a preliminary mandatory conference on
July 5, 2001.6 However, the respondents neither filed any position paper nor proffered pieces of
evidence in their defense despite their knowledge of the pendency of the case.

The Labor Arbiter’s Ruling

In a decision7 dated March 15, 2002, Labor Arbiter (LA) Elias H. Salinas partially ruled in favor of the
petitioners. The LA awarded the petitioners salary differential, service incentive leave, and
thirteenth month pays. In awarding these claims, the LA stated that the burden of proving the
payment of these money claims rests with the employer. The LA also awarded attorney’s fees in
favor of the petitioners, pursuant to Article 111 of the Labor Code.8

However, the LA denied the petitioners’ claims for backwages, overtime, holiday, and premium
pays. The LA observed that the petitioners failed to show that they rendered overtime work and
worked on holidays and rest days without compensation. The LA further concluded that the
petitioners cannot be declared to have been dismissed from employment because they did not show
any notice of termination of employment. They were also not barred from entering the respondents’
premises.

The Proceedings before the NLRC

Both parties appealed the LA’s ruling with the National Labor Relations Commission. The petitioners
disputed the LA’s denial of their claim for backwages, overtime, holiday and premium pays.
Meanwhile, the respondents questioned the LA’s ruling on the ground that the LA did not acquire
jurisdiction over their persons.

The respondents insisted that they were not personally served with summons and other processes.
They also claimed that they paid the petitioners minimum wages, service incentive leave and
thirteenth month pays. As proofs, they attached photocopied and computerized copies of
payroll sheets to their memorandum on appeal.9 They further maintained that the petitioners were
validly dismissed. They argued that the petitioners’ repeated defiance to their transfer to different
workplaces and their violations of the company rules and regulations constituted serious misconduct
and willful disobedience.10

On January 3, 2003, the respondents filed an unverified supplemental appeal. They attached
photocopied and computerized copies of list of employees with automated teller machine
(ATM) cards to the supplemental appeal. This list also showed the amounts allegedly deposited in
the employees’ ATM cards.11 They also attached documentary evidence showing that the
petitioners were dismissed for cause and had been accorded due process.

On January 22, 2003, the petitioners filed an Urgent Manifestation and Motion12 where they asked
for the deletion of the supplemental appeal from the records because it allegedly suffered from
infirmities. First, the supplemental appeal was not verified. Second, it was belatedly filed six months
from the filing of the respondents’ notice of appeal with memorandum on appeal. The petitioners
pointed out that they only agreed to the respondents’ filing of a responsive pleading until December
18, 2002.13 Third¸ the attached documentary evidence on the supplemental appeal bore the
petitioners’ forged signatures.
They reiterated these allegations in an Urgent Motion to Resolve Manifestation and Motion (To
Expunge from the Records Respondents’ Supplemental Appeal, Reply and/or
Rejoinder) dated January 31, 2003.14Subsequently, the petitioners filed an Urgent Manifestation
with Reiterating Motion to Strike-Off the Record Supplemental Appeal/Reply, Quitclaims and
Spurious Documents Attached to Respondents’ Appeal dated August 7, 2003.15 The petitioners
argued in this last motion that the payrolls should not be given probative value because they were
the respondents’ fabrications. They reiterated that the genuine payrolls bore their signatures, unlike
the respondents’ photocopies of the payrolls. They also maintained that their signatures in the
respondents’ documents (which showed their receipt of thirteenth month pay) had been forged.

The NLRC Ruling

In a resolution dated November 27, 2003, the NLRC partially ruled in favor of the respondents.16 The
NLRC affirmed the LA’s awards of holiday pay and attorney’s fees. It also maintained that the LA
acquired jurisdiction over the persons of the respondents through their voluntary appearance.

However, it allowed the respondents to submit pieces of evidence for the first time on appeal
on the ground that they had been deprived of due process. It found that the respondents did not
actually receive the LA’s processes. It also admitted the respondents’ unverified supplemental
appeal on the ground that technicalities may be disregarded to serve the greater interest of
substantial due process. Furthermore, the Rules of Court do not require the verification of a
supplemental pleading.

The NLRC also vacated the LA’s awards of salary differential, thirteenth month and service
incentive leave pays. In so ruling, it gave weight to the pieces of evidence attached to the
memorandum on appeal and the supplemental appeal. It maintained that the absence of the
petitioners’ signatures in the payrolls was not an indispensable factor for their authenticity. It pointed
out that the payment of money claims was further evidenced by the list of employees with ATM
cards. It also found that the petitioners’ signatures were not forged. It took judicial notice that many
people use at least two or more different signatures.

The NLRC further ruled that the petitioners were lawfully dismissed on grounds of serious
misconduct and willful disobedience. It found that the petitioners failed to comply with various
memoranda directing them to transfer to other workplaces and to attend training seminars for the
intended reorganization and reshuffling.

The NLRC denied the petitioners’ motion for reconsideration in a resolution dated April 28,
2006.17 Aggrieved, the petitioners filed a petition for certiorari under Rule 65 of the Rules of Court
before the CA.18

The CA Ruling

The CA affirmed the NLRC’s ruling. The CA held that the petitioners were afforded substantive and
procedural due process. Accordingly, the petitioners deliberately did not explain their side. Instead,
they continuously resisted their transfer to other PLDT offices and violated company rules and
regulations. It also upheld the NLRC’s findings on the petitioners’ monetary claims.

The CA denied the petitioners’ motion for reconsideration in a resolution dated August 28, 2009,
prompting the petitioners to file the present petition.19

The Petition
In the petition before this Court, the petitioners argue that the CA committed a reversible error when
it did not find that the NLRC committed grave abuse of discretion. They reiterate their arguments
before the lower tribunals and the CA in support of this conclusion. They also point out that the
respondents posted a bond from a surety that was not accredited by this Court and by the NLRC. In
effect, the respondents failed to perfect their appeal before the NLRC. They further insist that the
NLRC should not have admitted the respondents’ unverified supplemental appeal.20

The Respondents’ Position

In their Comments, the respondents stress that the petitioners only raised the issue of the validity of
the appeal bond for the first time on appeal. They also reiterate their arguments before the NLRC
and the CA. They additionally submit that the petitioners’ arguments have been fully passed upon
and found unmeritorious by the NLRC and the CA.21

The Issues

This case presents to us the following issues:

1) Whether the CA erred when it did not find that the NLRC committed grave abuse of
discretion in giving due course to the respondents’ appeal;

a) Whether the respondents perfected their appeal before the NLRC; and

b) Whether the NLRC properly allowed the respondents’ supplemental appeal

2) Whether the respondents were estopped from submitting pieces of evidence for the first
time on appeal;

3) Whether the petitioners were illegally dismissed and are thus entitled to backwages;

4) Whether the petitioners are entitled to salary differential, overtime, holiday, premium,
service incentive leave, and thirteenth month pays; and

5) Whether the petitioners are entitled to attorney’s fees.

The Court’s Ruling

The respondents perfected their

appeal with the NLRC because the
revocation of the bonding company's
authority has a prospective
application

Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of a judgment involving a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment appealed from."

Contrary to the respondents’ claim, the issue of the appeal bond’s validity may be raised for the first
time on appeal since its proper filing is a jurisdictional requirement.22 The requirement that the appeal
bond should be issued by an accredited bonding company is mandatory and jurisdictional. The
rationale of requiring an appeal bond is to discourage the employers from using an appeal to delay
or evade the employees' just and lawful claims. It is intended to assure the workers that they will
receive the money judgment in their favor upon the dismissal of the employer’s appeal.23

In the present case, the respondents filed a surety bond issued by Security Pacific Assurance
Corporation (Security Pacific) on June 28, 2002. At that time, Security Pacific was still an accredited
bonding company. However, the NLRC revoked its accreditation on February 16,
2003.24 Nonetheless, this subsequent revocation should not prejudice the respondents who relied on
its then subsisting accreditation in good faith. In Del Rosario v. Philippine Journalists, Inc.,25 we ruled
that a bonding company’s revocation of authority is prospective in application.

However, the respondents should post a new bond issued by an accredited bonding company in
compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of Procedure. This provision
states that "[a] cash or surety bond shall be valid and effective from the date of deposit or
posting, until the case is finally decided, resolved or terminated or the award satisfied."

The CA correctly ruled that the

NLRC properly gave due course to
the respondents’ supplemental
appeal

The CA also correctly ruled that the NLRC properly gave due course to the respondents’
supplemental appeal. Neither the laws nor the rules require the verification of the supplemental
appeal.26 Furthermore, verification is a formal, not a jurisdictional, requirement. It is mainly intended
for the assurance that the matters alleged in the pleading are true and correct and not of mere
speculation.27 Also, a supplemental appeal is merely an addendum to the verified memorandum on
appeal that was earlier filed in the present case; hence, the requirement for verification has
substantially been complied with.

The respondents also timely filed their supplemental appeal on January 3, 2003. The records of the
case show that the petitioners themselves agreed that the pleading shall be filed until December 18,
2002. The NLRC further extended the filing of the supplemental pleading until January 3, 2003 upon
the respondents’ motion for extension.

A party may only adduce evidence

for the first time on appeal if he
adequately explains his delay in the
submission of evidence and he
sufficiently proves the allegations
sought to be proven

In labor cases, strict adherence to the technical rules of procedure is not required. Time and again,
we have allowed evidence to be submitted for the first time on appeal with the NLRC in the interest
of substantial justice.28 Thus, we have consistently supported the rule that labor officials should use
all reasonable means to ascertain the facts in each case speedily and objectively, without regard to
technicalities of law or procedure, in the interest of due process.29

However, this liberal policy should still be subject to rules of reason and fairplay. The liberality of
procedural rules is qualified by two requirements: (1) a party should adequately explain any
delay in the submission of evidence; and (2) a party should sufficiently prove the allegations
sought to be proven.30 The reason for these requirements is that the liberal application of the rules
before quasi-judicial agencies cannot be used to perpetuate injustice and hamper the just resolution
of the case. Neither is the rule on liberal construction a license to disregard the rules of procedure.31

Guided by these principles, the CA grossly erred in ruling that the NLRC did not commit grave abuse
of discretion in arbitrarily admitting and giving weight to the respondents’ pieces of evidence for the
first time on appeal.

A. The respondents failed to

adequately explain their delay
in the submission of evidence

We cannot accept the respondents’ cavalier attitude in blatantly disregarding the NLRC Rules of
Procedure. The CA gravely erred when it overlooked that the NLRC blindly admitted and arbitrarily
gave probative value to the respondents’ evidence despite their failure to adequately explain their
delay in the submission of evidence. Notably, the respondents’ delay was anchored on their
assertion that they were oblivious of the proceedings before the LA. However, the respondents did
not dispute the LA’s finding that Mr. Romulo Pacia, Jr. appeared on their behalf on April 19, 2001
and May 21, 2001.32 The respondents also failed to contest the petitioners’ assertion that the
respondents’ counsel appeared in a preliminary mandatory conference on July 5, 2001.33

Indeed, the NLRC capriciously and whimsically admitted and gave weight to the respondents’
evidence despite its finding that they voluntarily appeared in the compulsory arbitration proceedings.
The NLRC blatantly disregarded the fact that the respondents voluntarily opted not to participate, to
adduce evidence in their defense and to file a position paper despite their knowledge of the
pendency of the proceedings before the LA. The respondents were also grossly negligent in not
informing the LA of the specific building unit where the respondents were conducting their business
and their counsel’s address despite their knowledge of their non-receipt of the processes.34

B. The respondents failed to

sufficiently prove the
allegations sought to be
proven

Furthermore, the respondents failed to sufficiently prove the allegations sought to be proven. Why
the respondents’ photocopied and computerized copies of documentary evidence were not
presented at the earliest opportunity is a serious question that lends credence to the petitioners’
claim that the respondents fabricated the evidence for purposes of appeal. While we generally
admit in evidence and give probative value to photocopied documents in administrative
proceedings, allegations of forgery and fabrication should prompt the adverse party to
present the original documents for inspection.35 It was incumbent upon the respondents to
present the originals, especially in this case where the petitioners had submitted their specimen
signatures. Instead, the respondents effectively deprived the petitioners of the opportunity to
examine and controvert the alleged spurious evidence by not adducing the originals. This Court is
thus left with no option but to rule that the respondents’ failure to present the originals raises the
presumption that evidence willfully suppressed would be adverse if produced.36

It was also gross error for the CA to affirm the NLRC’s proposition that "[i]t is of common knowledge
that there are many people who use at least two or more different signatures."37 The NLRC cannot
take judicial notice that many people use at least two signatures, especially in this case where the
petitioners themselves disown the signatures in the respondents’ assailed documentary
evidence.38 The NLRC’s position is unwarranted and is patently unsupported by the law and
jurisprudence.
Viewed in these lights, the scales of justice must tilt in favor of the employees. This conclusion is
consistent with the rule that the employer’s cause can only succeed on the strength of its own
evidence and not on the weakness of the employee’s evidence.39

The petitioners are entitled to

backwages

Based on the above considerations, we reverse the NLRC and the CA’s finding that the petitioners
were terminated for just cause and were afforded procedural due process. In termination cases, the
burden of proving just and valid cause for dismissing an employee from his employment rests upon
the employer. The employer’s failure to discharge this burden results in the finding that the dismissal
is unjustified.40 This is exactly what happened in the present case.

The petitioners are entitled to salary

differential, service incentive,
holiday, and thirteenth month pays

We also reverse the NLRC and the CA’s finding that the petitioners are not entitled to salary
differential, service incentive, holiday, and thirteenth month pays. As in illegal dismissal cases, the
general rule is that the burden rests on the defendant to prove payment rather than on the plaintiff to
prove non-payment of these money claims.41 The rationale for this rule is that the pertinent personnel
files, payrolls, records, remittances and other similar documents – which will show that differentials,
service incentive leave and other claims of workers have been paid – are not in the possession of
the worker but are in the custody and control of the employer.42

The petitioners are not entitled to

overtime and premium pays

However, the CA was correct in its finding that the petitioners failed to provide sufficient factual basis
for the award of overtime, and premium pays for holidays and rest days. The burden of proving
entitlement to overtime pay and premium pay for holidays and rest days rests on the employee
because these are not incurred in the normal course of business.43 In the present case, the
petitioners failed to adduce any evidence that would show that they actually rendered service in
excess of the regular eight working hours a day, and that they in fact worked on holidays and rest
days.

The petitioners are entitled to

attorney’s fees

The award of attorney’s fees is also warranted under the circumstances of this case. An employee
1âwphi 1

is entitled to an award of attorney’s fees equivalent to ten percent (10%) of the amount of the wages
in actions for unlawful withholding of wages.44

As a final note, we observe that Rodelito Ayala, Winelito Ojel, Renato Rodrego and Welito Loon are
also named as petitioners in this case. However, we deny their petition for the reason that they were
not part of the proceedings before the CA. Their failure to timely seek redress before the CA
precludes this Court from awarding them monetary claims.

All told, we find that the NLRC committed grave abuse of discretion in admitting and giving probative
value to the respondents' evidence on appeal, which errors the CA replicated when it upheld the
NLRC rulings.
WHEREFORE, based on these premises, we REVERSE and SET ASIDE the decision dated June
5, 2009, and the resolution dated August 28, 2009 of the Court of Appeals in CA-G.R. SP No.
95182. This case is REMANDED to the Labor Arbiter for the sole purpose of computing petitioners'
(Wilgen Loon, Jerry Arcilla, Albert Pereye, Arnold Pereye, Edgardo Obose, Arnel Malaras, Patrocino
Toetin, Evelyn Leonardo, Elmer Glocenda, Rufo Cunamay, Rolando Sajol, Rolando Abucayon,
Jennifer Natividad, Maritess Torion, Ammndo Lonzaga, Rizal Gellido, Evirdly Haque, Myrna Vinas,
Nena Abina, Emalyn Oliveros, Louie Ilagan, Joel Entig, Amel Araneta, Benjamin Cose and William
Alipao) full backwages (computed from the date of their respective dismissals up to the finality of this
decision) and their salary differential, service incentive leave, holiday, thirteenth month pays, and
attorney's fees equivalent to ten percent (10%) of the withheld wages. The respondents are further
directed to immediately post a satisfactory bond conditioned on the satisfaction of the awards
affirmed in this Decision.

SO ORDERED.